HomeMy Public PortalAbout05-11-2011 communications from managerMichael J. Driscoll
Town Manager
TOWN OF
WATERTOWN
Office of the Town Manager
Administration Building
149 Main Street
Watertown, MA 02472
Phone: 617-972-6465
Fax: 617-972-6404
www.watertown-ma.gov
towningr@watertown-ma.gov
To: Honorable Town Council
From: Michael J. Driscoll, Town Manager
Date: May 3, 2011
RE: Retirement Benefits
As a follow-up to the attached previously forwarded email correspondence regarding the
subject, I will bring this up under Communications from the Town Manager at the May 11, 2011 Town
Council Meeting and respectfully request the matter be referred to the Committee on Budget & Fiscal
Oversight.
Thank you for your consideration.
cc: Thomas J. Tracy, Town Auditor
Phyllis L. Marshall, Town Treasurer/Collector
Steven Magoon, Director of Community Development and Planning
Barbara A. Sheehan, Director of Watertown Contributory Retirement System
Hand JoAnna
From: Driscoll, Michael
Sent: Friday, April 29, 2011 3:26 PM
To: Town Councilors
Cc: Tracy, Thomas; Marshall, Phyllis; Magoon, Steven; Barbara A. Sheehan; Hand, JoAnna;
Osmond, Marsha
Subject: FW: Questions about retirement benefits that citizens in Watertown, MA should be asking
Attachments: FY2012 Budget Policy Guidelines.pdf
Good afternoon; I am forwarding this e-mail for informational purposes only. Please kindly do not respond.
Thank you. Michael.
Original Message
From: Driscoll, Michael
Sent: Friday, April 29, 2011 3:21 PM
To: 'matt.macdonald @gmail.com'
Subject: FW: Questions about retirement benefits that citizens in Watertown, MA should be asking
Good afternoon Matt; thank you for forwarding the e-mail below with many questions regarding retirement benefits.
Please be advised it is my intention at the May 11 Town Council meeting to respectfully request the data questions and
policy questions be referred to the Committee on Budget and Fiscal Oversight for their review and report back to the full
Town Council in advance of the budget hearing when retirement benefits is scheduled to be reviewed by the full Council
sitting as the Committee of the Whole during the Fiscal Year 2012 Budget hearings.
I have attached the Fiscal Year 2012 Budget Policy Guidelines adopted by the Honorable Town Council at their December
7,2010 meeting. I call your attention to 1C of the Financial Policies section as that Guideline is related to your questions
below. The last sentence of the guideline was added this year and I anticipate dialog regarding this sentence will occur at
the same Committee on Budget and Fiscal Oversight meeting.
Lastly; it is my understanding the Personnel Director contacted you directly and informed the various union contracts
will be placed on the Town's website next week.
Thank you. Michael.
Original Message
From: Matt MacDonald Jmailto:matt.macdonald@Rmail.coml
Sent: Friday, April 29, 2011 12:27 PM
To: Townmgr; Tracy, Thomas; Towncouncil
Subject: Questions about retirement benefits that citizens in Watertown, MA should be asking
Hi Mike/Tom and Town Councilors,
I've been reading a document report from the MMA titled "Retiree Health Care - The Brick That Broke Municipalities'
Backs".
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After reading this document I'm more than slightly concerned about what Watertown is doing to manage the post -
employment benefits (OPEB) that the MMA states is ^'$118,000,000. While I understand that a pay down schedule has
been put in place to manage the current $58,000,000 in pension liability I have not yet seen in our budgeting process a
plan to manage that massive benefits liability.
There are some questions that I think that the people of the town should have answers to so we can know how our
officials and employees are working on this problem:
Data questions:
1. What is our current OPEB liability?
2. What does the projected long term growth rate curve look like for health insurance costs?
3. How many retired members are in the benefit system?
4. How many active members are in the benefit system?
5. What has been our annual health care % growth rate over the past decade?
6. Where are the PDF contracts with the various unions so we can examine the details?
Policy questions:
1. What are the plans to control these costs and when will they start?
2. How if at all do our municipal employee benefits plans differ from those that the MMA states:
2a. After only 10 years of service, employees are entitled to lifetime health care benefits upon retirement 2b. Retirees
are eligible for health care benefits as early as age 55 2c. Municipal employees need only work 20 hours per week to
qualify 2d. Retiree health benefits include spouse and dependent coverage 2e. What are the deductibles and co -pays
I'd appreciate a written response so that I can share this information with other citizens.
Thanks,
Matt
FYI - I've also published this list of questions on my blog.
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Watertown's FY2012 Budget Policy Guidelines
Approved as Amended by the Town Council
December 7, 2010
The Town Council is adopting these budget policy guidelines pursuant to Section 5-1 of the
Watertown Horne Rule Charter. Based on these guidelines, the Town Manager will develop
budgetary goals and the Town budget for Fiscal Year 2012.
FINANCIAL POLICIES
A. Unreserved fund balance: In order to respond to emergencies and other unanticipated
needs, preserve financial flexibility, and maintain favorable bond ratings, the Town
should seek to maintain an unreserved fiord balance (including stabilization. funds) equal
to 7-10% of the annual operating budget. The Council and the Town Manager will work
to develop a formal multi -year policy on the unreserved fund balance, including the use
of free cash if the unreserved fund balance is above the 7-10% target.
B. Capital Expenditures: In order to maintain and improve its infrastructure, facilities,
and equipment, the Town should seek to make annual capital expenditures (including
debt and exclusive of enterprise funds) equal to at least 7.5-8% of the operating budget.
C. Pension Liability and Other Post Employment Benefits: In order to achieve long term
financial stability and meet the Town's obligations to its employees and retirees, the
Council, the Retirement Board and Town Manager will work to address the Town's
unfunded pension liability and other post -employment benefits (OPEB). Establish dialog
with Retirement Board and State representatives to consider options for pension reforms
for new hires.
II. ONGOING BUDGET PRACTICES
In preparing the budget for FY12 and future years, the Town Manager should continue to use the
following budget practices.
A. Continue the Town's efforts within all departments to obtain grant funding from
federal, state, and other sources, including the use college interns.
B. Continue to analyze the Town's charges for licenses, permits, penalties, and fees to
determine whether they should be increased or new ones instituted, while adhering to the
principal that fees should not exceed the cost of services provided.
C. Review the possibilities and cost implications of contracted services vs. staffing in
various departments.
D. Support the possibilities of providing more services on a regional or inter -municipal
basis in accordance with the council resolution.
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E. All department heads should seek to identify line items within their existing budgets
where costs can be controlled and not increased. Look at other possible scenarios
including spending freezes, level dollar and reduction budgets. Review the use of
overtime in each department and establish consistent Town -wide policies.
F. Continue to enhance the Town's website and use other technologies as cost effective
means of delivering information and services, increasing public awareness, and
encouraging public feedback.
G. Explore cost savings by sharing personnel across Town departments. Work towards
merging or combining the following functions to better serve both Town and School
Departments: facilities management, human resources, finance, and information
technology.
III. COST-SAVINGS/REVENUES
The Town Council believes that identification of cost savings and/or new revenues should be a
precondition to additional expenditures. To this end, in developing the FY12 budget, the Town
Manager should:
A. Move forward with an Energy Services Company (ESCO) agreement to implement
plan towards reducing municipal baseline energy usage by 20% in 5 years. Obtain
energy -related grants by becoming certified under the Green Communities Act.
B. Public safety: Police, Fire and Dispatch together represent the Town's biggest
expenditure after education. Proceed with a Public Safety study to determine how to best
deliver the level of service citizens want, more efficiently.
C. Implement the Town -wide Economic Development Program (including the newly
rezoned Pleasant Street Corridor District), with a long- term goal to increase town
revenue. The Program should include a marketing plan to prospective developers as well
as the use of state and federal grants and redevelopment programs.
D. Explore the feasibility of a standardized system of impact fees for projects subject to
site plan review. Consider mitigation monies for larger scale projects.
E. Actively seek Payment In Lieu Of Taxes (PILOT) agreements with each non-profit
organization owning property in Watertown.
IV. PROGRAM ENHANCEMENTS/EXPENDITURES
To the extent that resources allow, in light of the financial policies stated above, and adhering to
the principle of first identifying cost -savings and/or new revenue, the following program
enhancements and, if necessary, new expenditures should receive priority in the FY12 budget.
Education program enhancements and expenditures should be considered subsequently in light
of the recommendations of the School Committee.
A. Continue the improvement program for the Town's streets and sidewalks, including
street trees and planting strips. Pursue state/federal funding such as the Transportation
Improvement Program (TIP) and School Safety Zone funding to improve traffic and
safety.
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B. Examine the staffing structure of the Public Works Department to improve the ability
to perform routine maintenance, complete work order requests in a timely manner, and
strengthen the capacity to supervise contractors.
C. Explore the need and possible funding for a social worker/community health outreach
worker, including reaching out to the private sector for funding.
D. Finalize non -municipal re -use of the former branch libraries, and explore the options
for and budget implications of re -use of the former police station.
E. Determine the need for and how to fund future sewer and storm water infrastructure
improvements.
F. Create a Comprehensive Plan for the Town dealing with a broad spectrum of issues,
including development, zoning, and transportation, in order to encourage Town
government and its citizens to work in concert towards common goals. Incorporate all
previous resources, such as the Economic Development Study, the Open Space Plan, the
Pleasant Street Corridor District Study, etc. Include traffic and transportation resources
and improvements, and a review of the Zoning Ordinance.
V. BUDGET AND FINANCIAL MONITORING
A. In order to improve its ability to monitor the implementation of the Town budget, the
Town Council will receive quarterly reports on the revenues and expenditures during the
fiscal year.
B. The Town Council will receive a report on the use and balance of monies in the
Council reserve upon each transfer, and a report each month that there is a change in
Council expense line items.
C. An early -warning system will be established to alert the Town Council if revenues fall
below projections.
D. The Town Council will receive quarterly updates on progress in addressing the
recommendations in the annual audit report.
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