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Home My Public Portal About06-23-2015 Collective Bargaining Stab Fund 2015 ToWN OF 1630 WATERTOWN ,t r Office of the Town Manager Y 3d Administration Building ' - 149 Main Street Watertown,MA 02472 Phone:617-972-6465 www.watertown-ma.gov Michael J.Driscoll townmer(ahvatertown-magov Town Manager - To: Honorable Town Council From: Michael J. Driscoll, Town Manager Date: June 18, 2015 RE: Agenda Item - Transfer of Funds Request As you recall, prior to the close of Fiscal Years 2013 and 2014 the Honorable Town Council approved transfers to the Collective Bargaining Stabilization Fund to account for monies related to a prior year(s) contract in which an Agreement has not been reached (see attached July 11, 2013 and June 19, 2014 Agenda Item correspondences). As you are aware, at the May 12, 2015 Town Council Meeting the Honorable Town Council approved a Proposed Amendment to the Fiscal Year 2015 Budget, which included an appropriation of$400,000 to the Collective Bargaining Stabilization Fund to augment an upcoming transfer to the same stabilization fund prior to the end of this fiscal year (see attached April 28, 2015 Agenda Item correspondence). Collective Bargaining is one of the Budget issues that was identified in the Fiscal Year 2016 Budget Message. As of this date, two Town union groups (Firefighters Association and Police Association) are or will be engaged in negotiations for a successor collective bargaining agreement. As indicated in the July 11, 2013 Agenda Item correspondence, the Division of Local Services (DLS) officials have indicated funds for employee contracts may be encumbered only if the employer and employee bargaining representatives agree to contractual terms by July 15th with a final ratification. The DLS indicated the establishment of a stabilization fund would be appropriate to account for monies related to a prior year contract where an agreement has not been reached. Therefore, given all of the above, I respectfully request the attached transfer be considered at the June 23, 2015 Town Council Meeting. The proposed transfer is to account for monies related to a prior year (Fiscal Year 2015) contract in which an Agreement has not been reached with the Firefighters Association and Police Association. Thank you for your consideration in this matter. cc: Honorable School Committee Honorable Library Board of Trustees All Department Heads Joseph S.Fair,Esquire,Kopelman and Paige,P.C. TRANSFER AMOUNT $1,200,000 FROM: FY 15 TOWN COUNCIL RESERVE $ 500,000 0111152-570780 FY 15 TREASURER/COLLECTOR FULL TIME SALARIES $ 50,000 0114551-510111 FY 15 DPW CENTRAL MOTORS FULL TIME SALARIES $ 50,000 0140551-510111 FY 15 DPW SOLID WASTE CONTRACTED SERVICES $ 50,000 0143352-520303 FY 15 HEALTH FULL TIME SALARIES $ 50,000 0151051-510111 FY 15 TOWN GROUP HEALTH INSURANCE $ 200,000 0191200-510180 FY 15 SCHOOL GROUP HEALTH INSURANCE $ 100,000 0191200-510181 FY 15 RETIREE GROUP HEALTH INSURANCE $ 200,000 0191200-510182 TO: FY 15 TRANSFER TO COLLECTIVE BARGAINNING STABILIZATION FUND $ 1,200,000 0194000-596806 1 hereby certify to the availability, authority of funding source, mathematical accuracy and appropriate fiscal year. i DATE TOWN AUDI R " Pv TOWN OF 1630 WATERTOWN ( `• Office of the Town Manager � Administration Building 149 Main Street ' Watertown,MA 02472 Phone:617-972-6465 Michael J.Driscoll Fax:617-972-6404 tvwwavatertown-tna.gov Totten Manager towmner(&vvarerrown-ma.eov To: Honorable Town Council From: Michael J. Driscoll, Town Manager Date: July 11, 2013 RE: Agenda Item—Establishment of Collective Bargaining Stabilization Fund; and an Initial Transfer of Funds Thereto As you are aware, monies for a Proposed Fiscal Year 2010-2013 Collective Bargaining Agreement with the Firefighters Association are included in the "02"Town Council Reserve and the Fiscal Year 2013 Town Council Reserve. During the ongoing Full Financial Management Review, the Division of Local Services (DLS) officials have indicated funds for employee contracts may be encumbered only if the employer and employee bargaining representatives agree to contractual terms by July 15th with a final ratification. The DLS indicated the establishment of a stabilization fund would be appropriate to account for monies related to a prior year contract where an agreement has not been reached. Therefore, given all of the above, I respectfully request the attached Resolution establishing the Collective Bargaining Stabilization Fund be placed on the July 16, 2013 Town Council Agenda. For background purposes on the establishment of Special Purpose Stabilization Funds, enclosed please find a copy of the August 2008 City and Town article and the Informational Guideline Release (IGR) 04-201 regarding Creation of Multiple Stabilization Funds from the Department of Revenue. Additionally, I respectfully request the attached transfer to the Collective Bargaining Stabilization Fund be considered at the July 16, 2013 Town Council Meeting. Thank you for your consideration in this matter. cc: Honorable School Committee Honorable Library Board of Trustees All Department Heads John T. Loughran,Director of Business Services Gayle McCracken, Director of Human Resources RESOLUTION# R-2013 WHEREAS, a Proposed Fiscal Year 2010-2013 Collective Bargaining Agreement with the Firefighters Association has not been reached; and WHEREAS, funds for employee contracts may be encumbered only if the employer and employee bargaining representatives agree to contractual terms by July 15th with a final ratification; and WHEREAS, pursuant to the provisions of G.L. c. 40, § 513, the Town may establish a special purpose stabilization find by a two-thirds vote of the Town Council. NOW THEREFORE, BE IT RESOLVED that the Town Council of the City known as the Town of Watertown hereby establishes the Collective Bargaining Stabilization Fund and appropriates thereto the sum of$710,000. Council Member I hereby certify that at a regular meeting of the Town Council for which a quorum was present, the above Resolution was adopted by a vote of for,_against and present on July 16, 2013. Valerie Papas Mark S. Sideris Council Clerk Council President TRANSFER AMOUNT $710,000 FROM: FY 13 TOWN COUNCIL RESERVE $ 429,575 0111152-570780 FUND 02 TOWN COUNCIL RESERVE $ 280,425 0211152-570780 TO: FY 13 TRANSFER TO COLLECTIVE BARGAINNING STABILIZATION FUND $ 429,575 0194000-596606 FUND 02 TRANSFER TO COLLECTIVE BARGAINNING STABILIZATION FUND $ 280,425 0294000-596806 1 hereby certify to the availability, authority of funding source, mathematical accuracy and appropriate fiscal year. DATE TOWN AUDITOR Navjeet K.Bal,Commissioner•Robert G.Nunes,Deputy Comissioner&Director of Municipal Affairs Yand .. _ Tb)k n 7= - - - p :- -.: -. -`-_�- _ - - ._ Aublicat'ron of Itie Massachusetts De ariineot of Revenue s Orvisioriof:LoiSai Serices Volume 21,No.7 August 2008 Special Purpose Stabilization Funds: A Long-Term Planning Tool DLS Commentary Three proposals of interest to municipalities pushed Joe Markarian,Director Technical Assistance,Municipal Data Management and Technical Assistance Bureau through the legislature at the last moment of their two-year session: The 1945 statute that initially author- and retain interest earned. In the past, expanded intermunicipal agreements, ized cities and towns to establish a sta- municipalities would need state ap- a municipal spending commission, bilization fund restricted the use of any proval of special legislation to set up and broadband funds for unserved fund balance to capital expenditures. such a reserve. communities .. . . .. . .. . . . . .. . . . . .. 2 In 1991,permitted uses were expanded to include any lawful purpose, but still on track A special purpose stabilization fund: Best Practices uses a funds could not be reserved for a spe- • Encourages a community to think dashboard to stay on track with financial cific purpose. However with the adop- long-term. Programs to replace vehi- planning efforts and keep all parties tion of legislative amendments to M.G.L. cles, maintain buildings and improve informed with real-time information .. . 2 Ch.40§58 in 2003,municipalities can roads require an evaluation of all assets, Legal Somerville mayor takes the right now create multiple special purpose formulation of a replacement or repair to appoint all the way to the Mass- stabilization funds. Each of these funds schedule, and calculation of long-term achusetts Supreme Judicial Court can be assigned a different purpose projected costs, and wins . . . . . . . . . . . . . ... .. . . . . ..3 allowing municipalities to take advan- tage Helps a community save money. Focus A 10-year look at Proposition 2'h ing option, of a new management and fund- Rather than pay cash, if the $400,000 overrides.Are override approvals influ- . purchase price of a fire truck were bor- enced by community size, property As a result, at a time when many cities rowed over 15 years,interest payments wealth and the number of public and towns are faulted for operating in could add around$150.000 to the total school children? . .. . .. . . . ... . .. . . .4 perpetual crisis mode,for allowing mu- cost,depending on interest rates.Even nicipal assets to deteriorate, and for if this additional cost would have a The Community Preservation Act's reporting Form CP-2 gets an general short-sightedness, a special nominal tax rate impact, it can instead update that promises to make the form purpose stabilization fund can be an be saved or expended elsewhere. easier to complete .. . .. . . . .. .. .. . 11 effective planning tool. . Helps a community manage debt.A Mark your calendars for upcoming A fund might be established, for in- plan to accumulate cash over time and training classes.. . . . . . . .. ... .. . . . 12 stance, to pay solely for the mainte- pay outright for a moderate-range cap- nance and repair of municipal build- ital expenditure helps preserve debt Prof ite Senior Deputy Commissioner ings. Another might be created to capacity for major, high-dollar pur- James Reynolds celebrates 30 years supplement state highway funds, re- chases or projects. An approach that with the Department of Revenue and ceived under Chapter 90,and to cover balances debt with pay-as-you-go talks about his work along the way. . .13 the cost of an ongoing street improve- practices,and protects against unfore- Municipal Fiscal Calendar ment program.A special purpose sta- seen costs is viewed in a positive light September-October. . . . . ar ,, 1q bilization fund might also be set up to by credit rating agencies. finance a government-wide vehicle re- , Builds resident confidence in gov- placement program. For example, if a ernment.Special purpose stabilization community anticipated the need to funds directly address resident con- purchase a$400,000 fire truck in five funds and provide assurance that years, it could reserve $80,000 a year v" { in a special stabilization fund, purpose continued on page 9 City&Town•August 2008 Division of Local Services•www.mass.gov/dis 9 Special Purpose Stabilization Funds continued from page 1 money appropriated for a particular a capital project stabilization fund in Ultimately,special purpose stabilization purpose will be used for that purpose FY2008 and town meeting votes to cre- funds are most effective as a revenue and will not be diverted, ate the fund and appropriate$100,000 source, or savings account, for antici- Creation ofs special purpose stabiliza- to it. In FY2009, $102,500 (1.025 x pated expenditures. They work best tion fund, and an appropriation to that $100,000, 1,025 being 2.5 percent of when used to build moderate balances fund, requires two-thirds vote of a city the original override amount) is avail- and to pay mid-level expenditures that council, town meeting or district pru- able for"appropriation"and that entire the community will eventually have to dential(or similar)committee.The vote , ----- -- mak epaesllke and velding hicle purchases.ce, road must clearly define the purpose of each l° :';_,;_- .z:_-- -= :" .: fund established. Under the amended1.% (F1i Building stabilization balances through law, creating and appropriating to a >T , ,' 1 ` ir1 ,-- an override unquestionably involves an general stabilization fund now also re- increase to the tax levy,but special pur- quires two-thirds vote. T,47 pose stabilization funds provide an im- There are two options for building bat- XVr 04 t. Po tant response to resident's concerns ances in a special purpose stabilize- about the absence of long-term plan- e P P --' ,.--,..,;.::,:; -,; ninginmunicipalgovernment.Ifconsid- tion fund. One is the traditional appro- G4,f 3-- r eyed thoughtfully and implemented u- priation in a budget line-ftem, or in an - ":: _.::3-:.: ..-- 9 Y P P article, from within the levy or from -_ a; ' s dently,theyofferavehiclethatcanhelp Y a community think and act in a foreword other general fund revenues. Balances �?,c'-t".�' ��,�fj��}{�: � f � can also be transferred in from other ;_ looking manner, and effectively plan for iC. ' < .IiY kj i `===- future costs. existing accounts. � -`.`�r�r-.t.- .._ �f:=��x=>,-:;: For more information, lease see the A second new funding option is re- P ferred to as an override, but in fact, 10_-IliT ;_: DOR Information Guideline Release has characteristics of both a Proposi- tion (IGR)04-201 which is accessible from L. . ,F1 _>{fF ,-_ . the DLS website. Go to www.mass rid override and exclusion. Like be A � ^ f;�OV fWz� _' ov dls, click on Quick Links (more) override,additional tax revenue can be = - and then the Information Guideline Re- lease year-after-year without town- f4CCtiFCKi lease link. wide or city-wide referendum votes be- �:��;-�� r�•-��;�f;�� ;`3 �; yond the year of inception. However, + a i like an exclusion under Proposition 2➢:, the levy limit increase need not be per- amount is"appropriated."For FY2010, manent.Solely through the action each $105.062 (1.025 x $102,500) is avail- ° t year of the selectmen,or city council,it able,but only$80,000 is"appropriated." can be continued, lowered or deferred The amount available in FY2011 now entirely and resumed in a later year. In becomes $82,000 (1.025 x $80,000), any event, each year,the amount avail- but the selectmen choose to make no able increases by 2.5 percent. appropriation. The amount available in _ For example, let's say that the town's FY2012 is$82,000(1.025 x last appro- voters approve a$100,000 override for priation made, i.e.,$80.000). Informational Guideline Release (IGR) No. 04-201 January 2004 CREATION OF MULTIPLE STABILIZATION FUNDS. AND PROPOSITION 21/7.OVERRIDES FOR STABILIZATION FUNDS. Chapter 46§§14 and 50 and Chapter 140§§19 and 137 of the Acts of 2003 (Amending G.L. Ch. 40§5B and Ch.59§21C(g)) SUMMARY: These guidelines explain new legislation that gives cities, towns and districts the flexibility to create multiple stabilization funds for different purposes. The legislation amends G.L. Ch. 40 §5B, which previously provided for a single stabilization fund into which cities, towns and districts could appropriate monies to be reserved for future appropriation for any lawful purpose. Under the amendment, a community may now establish one or more stabilization funds for different purposes by a two-thirds vote of its legislative body. It may amend the purposes of those funds at a later time in the same manner. Appropriations both into and from the funds require a two-thirds vote of the legislative body. Previously, appropriations to the stabilization fund only required a majority vote. Interest earned on all stabilization funds remains with the funds. The interest provision had been inadvertently omitted when the statute was amended, but it was restored by a recent technical amendment and applies retroactively. Ch. 140 §§19 and 137 of the Acts of 2003. In addition, a new paragraph has been included in G.L. Ch. 59 §21C(g), which authorizes a property tax levy limit override under Proposition 21/2. Under this new provision, a city or town that has an override approved by its voters for the purpose of making appropriations to any stabilization fund must now allocate or dedicate the additional levy capacity resulting from that override to the same purpose in subsequent years. Ordinarily, monies from an override are only earmarked for the stated purpose in the fiscal year the override is effective. Two-thirds of the selectmen, town council or city council, with the mayor's approval if required by law, must vote to "appropriate" the additional capacity for the same stabilization fund purpose each year after the override takes effect. If"appropriated," the assessors must raise the amount in the tax rate and the municipalitys levy limit is increased accordingly for that year. Voters may approve a change in the purpose for which the additional levy capacity can be used in future years. Approval of any change is by majority vote at a referendum. These changes became effective Tuly 31, 2003. They apply to any appropriation voted and levy limit override approved for a stabilization fund after that date. PROPERTY TAX BUREAU DANIEL J. MURPHY, CHIEF -2- GUIDELINES: I. MULTIPLE STABILIZATION FUNDS A. Creation of Funds Stabilization funds may be created for one or more different purposes. G.L. Ch. 40 §5B. A fund may be created for a broad category of spending purposes, e.g., any lawful purpose, capital budget purposes or purposes for which the community may borrow money. It may also be created for a specific purpose or project, e.g., acquire a new fire truck or undertake a particular school construction project. Creation of a fund requires a two-thirds vote of the legislative body of the city, town or district, The vote must clearly define the purpose(s) of the fund. B. Pre-existine Fund Any pre-existing stabilization fund balance should continue to be treated as a reserve for any lawful purpose, i.e. a "general' stabilization fund. The city, town or district can reallocate or earmark all or part of that balance to any new stabilization funds it creates by a vote to transfer monies from that "general' stabilization fund to the newly created fund. See Section I-D below. C. Chaneine Fund Purpose The purpose of a stabilization fund may be changed at any later time by a two- thirds vote of the legislative body. For example, if a community had established a fund in order to reserve monies to acquire a new fire truck and a balance remains after the purchase,the legislative body could vote to change the purpose to meet some new savings objective. If a Proposition 2'/2 levy limit override was approved for the purpose of funding the particular stabilization fund, however, the city or town must also follow the referendum procedure explained in Section II-C below to be able to change the fund purpose and then continue using the additional levy capacity resulting from that override in future years. D. Avvrovriations and Transfers Appropriations into and from any stabilization fund require a two-thirds vote of the legislative body, -3- Monies may also be transferred from one stabilization fund to another by two- thirds vote. If the monies in the fund from wluch the transfer is made could not be appropriated directly for the purpose of the fund receiving the transfer, e.g., a transfer of $50,000 from a fund for a particular school construction project to a fund to construct a new senior center, the vote also serves as a change in purpose to the extent of the amount appropriated. E. Investment and Interest The treasurer may invest stabilization funds in national, savings or cooperative banks, Massachusetts trust companies, federal savings and loans associations located in Massachusetts or securities that are legal investments for savings banks under Massachusetts law. All interest earned on the investment of stabilization funds belongs to the funds. The treasurer may pool monies from all stabilization funds for investment purposes, but the accounting officer must account for them separately in the general ledger and allocate interest earned on the pooled monies proportionately to each stabilization fund. F. Limits on Funds 1. Annual ADDrooriations Total annual appropriations to all stabilization funds are limited to 10 percent of the prior year's tax levy. This includes "appropriations" of additional levy capacity resulting from Proposition 21/2 overrides approved for the funds. See Section II-B below. The limit on total appropriations may be exceeded with approval of the Director of Accounts. 2. Balance The total of all stabilization fund balances cannot exceed 10 percent of a community's equalized valuation. II. STABILIZATION FUND OVERRIDES A. Presentation and Annroval of Override Referendum Cities and towns may ask voters to approve a Proposition 21/2 levy limit override referendum for the purpose of funding any of the stabilization funds it establishes. -4- If approved, the additional levy capacity is earmarked for the same stabilization fund in the fiscal year the override is effective and subsequent years. G.L. Ch. 59 §21C(g). Therefore, the amount of any override for a stabilization fund must be clearly identified, preferably by presenting a separate override question for each stabilization fund being funded. For example: Shall the city/town of be allowed to assess an additional $100,000 in real estate and personal property taxes for the purposes of funding the municipal capital stabilization fund for the fiscal year beginning July 1,_? Shall the city/town of be allowed to assess an additional $100,000 in real estate and personal property taxes for the purposes of funding the school capital stabilization fund for the fiscal year beginning July 1,—? If the amount is included in an override for multiple purposes, however, the exact amount allocated to the particular stabilization fund must be stated. For example: Shall the city/town of be allowed to assess an additional $1,000,000 in real estate and personal property taxes for the purposes of funding the town and school operating budgets, the municipal capital stabilization fund ($100,000) and the school capital stabilization fund ($100.000) for the fiscal year beginning July 1,_? B. Avvrouriation of Override in Future Years 1. Annual Anoronriation Procedure In the year the override is effective, the appropriation of the funds generated by the override to the particular fund is made by the usual appropriation procedure, i.e., a two-thirds vote of the legislative body. Each year thereafter, however, the selectmen, town council or city council, with the mayor's approval if required by law, must decide whether to "appropriate" any of the additional capacity resulting from the override for the same stabilization fund purpose. A two-thirds vote is required to make any "appropriation". -5- 2. Avvrovriation Amount All or some of the additional levy capacity may be "appropriated." In the first year after the override is effective, the additional levy capacity that may be appropriated is 102.5 percent of the override amount. In subsequent years, it is 102.5 percent of the amount of additional levy capacity appropriated in the last year it was appropriated. For example, a $100,000 override is approved for a school capital project stabilization fund for fiscal year 2005 and the legislative body appropriates the same amount from that year's tax levy for that purpose. In FY2006, $102,500 is available for "appropriation"by the selectmen,town council or city council, with the mayor's approval if required by law. That entire amount is "appropriated." In FY2007, $105,062 (1.025 x FY2006 appropriation of $102,500) is available, but only $80,000 is "appropriated." The amount available in FY2008 now becomes $82,000 (1.025 x FY2007 appropriation of $80,000). No appropriation is made in FY2008, however. The amount available in FY2009 is $82,000 (1.025 x last appropriation made, i.e.,FY2007 appropriation of$80,000). 3. Tax Rate The assessors must raise the amount "appropriated" in the tax rate. This "appropriation" is reported on page two of the tax rate recapitulation under "Other Amounts to Be Raised" and documented by a certified copy of the "appropriation" vote, as explained in the annual tax rate recapitulation instructions issued by the Bureau of Accounts. 4. Levv Limit Calculation The municipality's levy limit for any year is increased by the amount of additional levy capacity that is appropriated for the stabilization fund purpose. The new limit must still be within overall levy ceiling of 21/2 percent of the full and fair cash value of taxable property. C. Chanae in Override Purpose 1. Presentiniz Referendum The selectmen, town council or city council, with the mayor's approval if required by law,may ask the voters to approve a change in the purpose of the override. This change can result in the additional levy capacity being allocated to another stabilization fund or to any other municipal purpose. A two-thirds vote is required to place the referendum before the voters. -6- 2. Referendum Form The following question form should be used to present a referendum to change the override purpose: Shall the city/town of be allowed to change the purpose of a Proposition 21/2 override referendum approved at an election held on _ for the (capital stabilization fund) to the following new purpose(s): for the fiscal year beginning July 1,_? 3. Referendum Approval The referendum is approved if a majority of those voting on the question vote "yes." 4. Appropriation in Future Years If the purpose of the override is changed to another stabilization fund, or other purpose, the additional levy capacity would have to be "appropriated" to the new purpose each year or the levy limit would be reduced. See Section II-B above. TOWN OF 1630 WATERTOWN ,i Office of the Town Manager Administration Building 149 Main Street -%Vatertown,MA 02472 Phone;617-972-6465 Fax:617.972-6,104 Michael).Driscoll wtvw.watertown-ma.gov Town Manager Lomnin2r(Avater tow t_Ilr:t•pOV To: Honorable Town Council _ -- — From: Michael J.Driscoll,Town Manager Date: June 19,2014 RE: Agenda Item-Transfer of Funds Request As you recall,the Honorable Town Council established a Collective Bargaining Stabilization Fund at the July 16,2013 Town Council Meeting (see attached July 11,2013 Agenda Item correspondence). Collective Bargaining is one of the Budget issues that was identified in the Fiscal year 20t5 Budget Message, As of this date, four Town union groups (Firefighters Association,Library,Police Association and Police Supervisors) are or will be engaged in negotiations for a successor collective bargaining agreement. As indicated in the July 11,2013 Agenda Item correspondence,the Division of Local Services (DLS) officials have indicated fiords for employee contracts may be encumbered only if the employer and employee bargaining representatives agree to contractual terms by July 15th with a final ratification. The DLS indicated the establishment of a stabilization fund would be appropriate to account for monies related to a prior year contract where an agreement has not been reached. Therefore, given all of the above, I respectfully request the attached transfer be considered at the June 24,2014 Town Council Meeting, The proposed transfer is to account for monies related to a prior year(Fiscal Year 2014) contract in which an Agreement has not been reached with the, Firefighters Association,Library Union,Police Association and Police Supervisors. Thank you for your consideration in this trotter. cc: Honorable School Committee Honorable Library Board of Trustees All Department Heads Joseph S.Fair,Esquire,Kopelman and Paige,P.C. TRANSFER AMOUNT $985,000 FROM: FY 14 TOWN COUNCIL RESERVE $ 986,000 0111162-570780 TO: FY 14 TRANSFER TO COLLECTIVE BARGAINNING STABILIZATION FUND $ 985,000 0194000-596806 1 hereby certify to the availability, authority of funding source, mathematical accuracy and appropriate fiscal year. DATE i / TOWN AUDITrOR o Town of 1630 WATERTOWN Office of the Tcnvn Manager M ' Administration Building t6 149 Main Street Watertown,MA 02472 Phone:617-972.6465 Fax:6t7-972-6404 Michael),Driscoll vn"VA'atertown-nra.gov Town Manager rownmvr(a%vaterrown-nm.vov To: Honorable Town Council From: Michael J.Driscoll,Town Manager Date: July 11,2013 RE: Agenda Item—Establishment of Collective Bargaining Stabilization Fund;and an Initial Transfer of Funds Thereto As you are aware, monies for a Proposed Fiscal Year 2010-2013 Collective Bargaining Agreement with the Firefighters Association are included in the"02"Town Council Reserve and the Fiscal Year 2013 Town Council Reserve. During the ongoing Full Financial Management Review, the Division of Local Services (DLS) officials have indicated funds for employee contracts may be encumbered only if the employer and employee bargaining representatives agree to contractual terms by July 15n'with a final ratification. The DLS indicated the establishment of a stabilization fund would be appropriate to account for monies related to a prior year contract where an agreement has not been reached. Therefore, given all of the above, I respectfully request the attached Resolution establishing the Collective Bargaining Stabilization Fund be placed on the July 16,2013 Town Council Agenda. For background purposes on the establishment of Special Purpose Stabilization Funds, enclosed please find a copy of the August 2008 City and Town article and the Informational Guideline Release (IGR)04-201 regarding Creation of Multiple Stabilization Funds from the Department of Revenue. Additionally, I respectfully request the attached transfer to the Collective Bargaining Stabilization Fund be considered at the July 16,2013 Town Council Meeting. Thank you for your consideration in this matter. cc: Honorable School Committee Honorable Library Board of Trustees All Department Heads John T.Loughran,Director of Business Services Gayle McCracken,Director of Human Resources RESOLUTION# R-2013 WHEREAS, a Proposed Fiscal Year 2010.2013 Collective Bargaining Agreement with the Firefighters Association has not been reached;and WHEREAS, funds for employee contracts may be encumbered only if the employer and employee bargaining representatives agree to contractual terms by July 15th with a final ratification; and WHEREAS,pursuant to the provisions of G.L.o. 40, § 5B, the Town may establish a special purpose stabilization fund by a two-thirds vote of the Town Council, NOW THEREFORE,BE IT RESOLVED that the Town Council of the City known as the Town of Watertown hereby establishes the Collective Bargaining Stabilization Fund and appropriates thereto the sum of$710,000. Council Member I hereby certify that at a regular meeting of the Town Council for which a quorum was present, the above Resolution was adopted by a vote of_for,_,against and`present on July 16,2013. Valerie Papas Mark S. Sideris Council Clerk Council President TRANSFER AMOUNT $710,000 FROM: FY 13 TOWN COUNCIL RESERVE $ 429,675 0111152-570780 FUND 02 TOWN COUNCIL RESERVE $ 280,425 0211152.570780 TO: FY 13 TRANSFER TO COLLECTIVE BARGAINNING STABILIZATION FUND $ 429,675 0194000-596806 FUND 02 TRANSFER TO COLLECTIVE BARGAINNING STABILIZATION FUND $ 280,425 0294000-596806 I hereby certify to the availability,authority of funding source,mathematical accuracy and appropriate fiscal year. DATE TOWN AUDITOR cItY Navleat K.Bal,Cor mlWoner•Robert G.Nunes,Deputy Comiss'.oner&Director of Municipal Affairs and ,` h• ter./ ..:..¢ Town Volume 2t,No,T August 2008 Special Purpose Stabilization Funds: rr+xanrr�nr; � rf A Long-Term Planning Tool DLS Commentary Three proposals Joe Markarian,Director or Technical Assistance,Municipal Data Management through the l legislature at the last Interest to pushed and Technical Assistance Bureau th moment of their two-year sesslon: The 1945 statute that initially author- and retain interest earned. In the past, expanded Intermunlcfpal agreements, ized cities and towns to establish a sta- municipalities would need state ap- a municipal spending commission, bllizalion fund restricted the use of any proval of special legislation to set up and broadband funds for unserved fund balance to capita(expenditures. such a reserve. communities .....................2 In 1991,permitted uses were expanded A specie purpose stabilization fund: Best Practices Wellesley uses a to Include any(awful purpose, but still dashboard to stay on track with financial funds could not be reserved for a spe- • Encourages a community to think planning efforts and keep all parties cff(c purpose. However with the Seep- long-term. Programs to replace vehl- Informed with real-time information ...2 lion of legislative amendments to M.G.L. cles, maintain buildings and improve Ch,40§5B in 2003,municipalities can roads require an evaluation of all assets, Legal Somerville mayor takes the right now create multiple special purpose formulation of a replacement or repair to appoint all the way to the Mass- stabilization funds.Each of these funds schedule,and calculation of long-term achusetts Supreme Judicial Court can be assigned a different purpose projected costs. and wins ........................3 allowing municipalities to take advan• Helps a community save money. Focus A 10-year look at Proposition 21/: tag°of a new management and fund- Rather than pay cash, if the$400,000 overrides.Are override approvals Influ- ing option, purchase price of a fire truck were bor• enced by community size,property As a result,at a time when many cities rowed over 15 years,Interest payments wealth and the number of public and towns are faulted for operating In could add around$160,000 to the total school children?..................4 perpetual crisis mode,for allowing mu- cost,depending on Interest rates.Even The Community Preservation nicipal assets to deteriorate, and for if this additional cost would have a Act's reporting Form CP.2 gets an general short-sightedness, a special nominal tax rate Impact, It can Instead update that promises to make the form purpose stabilization fund can be an be saved or expended elsewhere. easier to complete............... effective planning tool.11 • Helps a community manage debt.A Mark your calendars for upcoming A fund might be established, for In- plan to accumulate cash over time and training classes..................12 stance, to pay solely for the malme- pay outright for a modarate•range cap- nance and repair of municipal build- list expenditure helps preserve debt Profile Senior Deputy Commissioner ings. Another might be created to capacity for major, high-dollar pur- James Reynolds celebrates 30years supplement state highway funds, re- chases or projects. An approach that with the Department of Revenue and celved under Chapter 90,and to cover balances debt with pay-as-you-go talks about his work along the way...13 the cost of an ongoing street Improve- practices,and protects against unfore- Municipal Fiscal Calendar ment program.A special purpose sta- seen costs is viewed in a positive light September-October .............14 bfllzatlon fund might also be set up to by credit rating agencies, finance a govemment-wide vehicle re- placement program For example, If a ernment,Special purpose stabilization community anticipated 00,0 0fir the need to funds directly address resident con- years,It a could reserve lire truck in five cerns and provide assurance that years,It could reserve$50,000 a year In a special purpose stabilization fund, continued on pago 9 City&Town<August 2008 Division of Local Services-tv<vw.maas.gov/dls 0 Special Purpose Stabilization Funds continued from page 7 money appropriated for a particular a capital project stabilization fund In Ultimately,special purpose stabilization purpose will be used for that purpose FY2008 and town meeting votes to cre- funds are most effective as a revenue and will not be diverted. ate the fund and appropriate$100,000 source, or savings account, for antici- Creationofa special purposestabliiza- to it. In FY2009, $102,600 (1.025 x pated expenditures. They work best C0 ilon fund, and an appropriation to that $100,O , 1.025 being 2.5 percent of when used to build moderate balances fund, requires two-thirds vote of a city the original override amount) Is avail- and to pay midlevel expenditures that able for'apprcprlallon"and that entire the community will eventually have to council, town meeting or district city make, I building maintenance, road den an denial(or slmllar)committee.The vote r3• r - must clearly define the purpose of each = repairs and vehicle purchases. fund established.Under the amended i', Building stabilization balances through law, creating and appropriating to a _ an override unquestionably Involves an general stabllization fund now also re- increase to the tax levy,but special pur- quires two-thirds vote. pose stabilization funds provide an Im• There are two options for building bah- portant response to resident's concerns ances In a special purpose stabilize- about the absence of long-term plan- lion fund. One is the traditional appro- . , , . L, nrng it municipal government.If ed pru- prlation In a budget line-item, or in an eyed thoughtfully andhicle Implemented pro• t can help article, from within the levy or from j acommhey think aforeword other general fund revenues.Balances ;l ' ; - a community man think and act in a foreword can also be transferred in from other r looking manner,and effectively plan for future costs. existing accounts. A second new funding option Is re- For more Information, please see the OOR Information Guideline Release (erred to as an override, but in fact, has characteristics of both a Proposf- the 04-201 which is accessible from tion 2'h override and exclusion.Like an F the DLS vlick on Quick to inks .m(more) override,additional tax revenue can be ov then thick on Qubk Links (more) and then the Information Guideline Re- raised year-after-year without town- ease link, o wide or city-w(de referendum votes be- yond the year of Inception. However, like an exclusion under Propositioh 2Yt, ' the levy limit Increase need not be per- amount Is"appropriated."For FY2010. manent,Solely through the action each $105,062 (1.025 x$102,500) is avail- year of the selectmen,or city council,it able,but only$30,000 is'approp fated" thine u v can be continued,lowered or deferred The amount available in FY2011 now ANNOW,• ill, entirely and resumed in a later year. In becomes $82,000 (1,025 x $80.000), any event,each year,the amount avail- but the selectmen choose to make no able Increases by 2.5 percent, appropriation. The amount available In For example, let's say that the town's FY2012 Is$82,000(1.025 x last appro• voters approve a$100,000 override for priation made,i.e.,$80,000).. Informational Guideline Release(IGR)No, 04-201 January 2004 CREATION OF MULTIPLE STABILIZATION FUNDS AND PROPOSITION 2r/2 OVERRIDES FOR STABILIZATION FUNDS Chapter 46§§14 and 50 and Chapter 140§§19 and 137 of the Acts of 2003 (Amending G.L. Ch.40§5B and Ch.59§21C(g)) SUMMARY: These guidelines explain new legislation that gives cities, towns and districts the flexibility to create multiple stabilization funds for different purposes. The legislation amends G.L. Ch. 40 §513, which previously provided for a single stabilization fund into which cities, towns and districts could appropriate monies to be reserved for future appropriation for any lawful purpose. Under the amendment, a community may now establish one or more stabilization funds for different purposes by a two-thirds vote of its legislative body. It may amend the purposes of those funds at a later time in the same manner. Appropriations both into and from the funds require a two-thirds vote of the legislative body. Previously, appropriations to the stabilization fund only required a majority vote. Interest earned on all stabilization funds remains with the funds. The interest provision had been inadvertently omitted when the statute was amended, but it was restored by a recent technical amendment and applies retroactively. Ch. 140§§19 and 137 of the Acts of 2003. In addition, a new paragraph has been included in G,L. Ch, 59 §21C(g), which authorizes a property tax levy limit override under Proposition 2r/2. Under this new provision, a city or town that has an override approved by its voters for the purpose of making appropriations to any stabilization fund must now allocate or dedicate the additional levy capacity resulting from that override to the same purpose in subsequent years. Ordinarily, monies from an override are only earmarked for the stated purpose in the fiscal year the override is effective. Two-thirds of the selectmen, town council or city council, with the mayor's approval if required by law, must vote to "appropriate" the additional capacity for the same stabilization fund purpose each year after the override takes effect. If"appropriated," the assessors must raise the amount in the tax rate and the municipality's levy limit is increased accordingly for that year. Voters may approve a change in the purpose for which the additional levy capacity can be used in future years, Approval of any change is by majority vote at a referendum. These changes became effective Tulv 31,2003. They apply to any appropriation voted and levy limit override approved for a stabilization fund after that date. PROPERTY TAX BUREAU DANIEL J.MURPHY,CHIEF .2. GUIDELINES: I. MULTIPLE STABILIZATION FUNDS A. Creation of Funds Stabilization funds may be created for one or more different purposes. G.L, Ch. 40 §513. A fund may be created for a broad category of spending purposes, e.g., any lawful purpose, capital budget purposes or purposes for which the community may borrow money. It may also be created for a specific purpose or project, e.g„ acquire a new fire truck or undertake a particular school construction project. Creation of a fund requires a two-thirds vote of the legislative body of the city, town or district, The vote must clearly define the purpose(s) of the fund. B. Pre-existine Fund Any pre-existing stabilization fund balance should continue to be treated as a reserve for any lawful purpose, i.e. a "general' stabilization fund. The city, town or district can reallocate or earmark all or part of that balance to any new stabilization funds it creates by a vote to transfer monies from that "general" stabilization fund to the newly created fund. See Section I-D below. C. Chaneina Fund Purpose The purpose of a stabilization fund may be changed at any later time by a two- tlurds vote of the legislative body. For example, if a community had established a fund in order to reserve monies to acquire a new fire truck and a balance remains after the purchase, the legislative body could vote to change the purpose to meet some new savings objective. If a Proposition 21A Ievy limit override was approved for the purpose of funding the particular stabilization fund, however, the city or town must also follow the referendum procedure explained in Section II-C below to be able to change the fund purpose and then continue using the additional levy capacity resulting from that override in future years. D. Arovrovriations and Transfers Appropriations into and from any stabilization fund require a two-thirds vote of the legislative body. -3- Monies may also be transferred from one stabilization fund to another by two- thirds vote. If the monies in the fund from which the transfer is made could not be appropriated directly for the purpose of the fund receiving the transfer, e.g.,a transfer of$50,000 from a fund for a particular school construction project to a fund to construct a new senior center,the vote also serves as a change in purpose to the extent of the amount appropriated. E. Investment and Interest The treasurer may invest stabilization funds in national, savings or cooperative banks, Massachusetts trust companies, federal savings and loans associations located in Massachusetts or securities that are legal investments for savings banks under Massachusetts law. All interest earned on the investment of stabilization funds belongs to the funds. The treasurer may pool monies from all stabilization funds for investment purposes, but the accounting officer must account for them separately in the general ledger and allocate interest earned on the pooled monies proportionately to each stabilization fund. F. Limits on Funds 1. Annual Anurooriations Total annual appropriations to all stabilization funds are limited to 10 percent of the prior year's tax levy. This Includes "appropriations" of additional levy capacity resulting from Proposition 21/2 overrides approved for the funds. See Section II-B below. The limit on total appropriations may be exceeded with approval of the Director of Accounts. 2. Balance The total of all stabilization fund balances cannot exceed 10 percent of a community's equalized valuation. II. STABILIZATION FUND OVERRIDES A. Presentation and Avproval of Override Referendum Cities and towns may ask voters to approve a Proposition 21/2levy limit override referendum for the purpose of funding any of the stabilization funds it establishes. -4- If approved, the additional levy capacity is earmarked for the same stabilization fund in the fiscal year the override Is effective and subsequent years. G.L. Ch.59 §21C(g), Therefore, the amount of any override for a stabilization fund must be clearly identified, preferably by presenting a separate override question for each stabilization fund being funded. For example: Shall the cit town of be allowed to assess an additional $100.000 in real estate and personal property taxes for the purposes of fundine the municipal ca_aital stabilization fund for the fiscal year beginning July 1,_? Shall the ci town of be allowed to assess an additional $100,000 in real estate and personal property taxes for the purposes of hmdinz the school capital stabilization fund for the fiscal year beginning July 1,_? If the amount is included in an override for multiple purposes, however, the exact amount allocated to the particular stabilization fund must be stated. For example: Shall the city/town of be allowed to assess an additional $1,000,000 in real estate and personal property taxes for the purposes of hutdinv, the town and school operating budgets. the municipal capital stabilization fund t$100.0001 and the school capital stabilization fund f$100.0001, for the fiscal year beginning July 1,_.? B. Appropriation of Override in Future Years 1, Annual Appropriation Procedure In the year the override is effective, the appropriation of the funds generated by the override to the particular fund is made by the usual appropriation procedure,i.e., a two-thirds vote of the legislative body. Each year thereafter, however, the selectmen,town council or city council, with the mayor's approval if required by law, must decide whether to "appropriate" any of the additional capacity resulting from the override for the same stabilization fund purpose. A two-thirds vote is required to make any"appropriation". -5- 2, Appropriation Amount All or some of the additional levy capacity may be "appropriated." In the first year after the override is effective, the additional levy capacity that may be appropriated is 102.5 percent of the override amount. In subsequent years, it is 102.5 percent of the amount of additional levy capacity appropriated in the last year it was appropriated, For example, a $100,000 override is approved for a school capital project stabilization fund for fiscal year 2005 and the legislative body appropriates the same amount from that year's tax levy for that purpose. In FY2006,$102,500 is available for"appropriation" by the selectmen, town council or city council,with the mayor's approval if required by law. That entire amount is "appropriated." In FY2007, $105,062 (1.025 x FY2006 appropriation of$102,500) is available, but only$80,000 is "appropriated." The amount available in FY2008 now becomes $82,000 (1.025 x FY2007 appropriation of$80,000). No appropriation is made in FY2008, however. The amount available in FY2009 is $82,000 (1.025,x last appropriation made,i.e.,FY2007 appropriation of$80,000). 3. Tax Rate The assessors must raise the amount "appropriated" in the tax rate. This "appropriation" is reported on page two of the tax rate recapitulation under "Other Amounts to Be Raised" and documented by a certified copy of the "appropriation" vote, as explained in the annual tax rate recapitulation instructions issued by the Bureau of Accounts. 4. Lew Limit Calculation The municipality's levy limit for any year is increased by the amount of additional levy capacity that is appropriated for the stabilization fund purpose. The new limit must still be within overall Ievy ceiling of 21/2 percent of the full and fair cash value of taxable property. C. Chanee in Override Purpose 1. Presentine Referendum The selectmen, town council or city council, with the mayor's approval if required by law,may ask the voters to approve a change in the purpose of the override. This change can result in the additional levy capacity being allocated to another stabilization fund or to any other municipal purpose. A two-thirds vote is required to place the referendum before the voters. .g. 2. Referendum Form, The following question form should be used to present a referendum to change the override purpose: Shall the city/town of be allowed to change the purpose of a Proposition 21h override referendum approved at an election held on _ for the (capital stabilization fund) to the following new purpose(s): for the fiscal year beginning July 1,^? 3. Referendum Anoroval The referendum is approved if a majority of those voting on the question vote"yes." 4. Avvrovriation In Future Years If the purpose of the override is changed to another stabilization fund, or other purpose, the additional levy capacity would have to be "appropriated" to the new purpose each year or the levy limit would be reduced, See Section II-B above. ToWN OF �163U WATERTOWN Office of the Twit Manager r`rt�i_� yt1 S • � ��'` Administration Building 149MainStreet Watertown,MA 02472 Phone:617-972-6465 Michael J.Driscoll Eax:6t7-972-6404 tntm'.tvatertory n-nta.gov Town ivlauager townmgrC�hvatcrtotvn-nm.gov TO: Honorable Town Council FROM; Michael J.Driscoll,Town Manager DATE: April 28,2015 RE: Proposed Amendment to the Fiscal Year 2015 Budget Enclosed please find, for your review and consideration,a Proposed Amendment to the Fiscal Year 20I5 Budget: The proposed amendment is related to two items. • Funding of one time Transportation and Comprehensive Plan Implementation Services • Funding of$400,000 to the Collective Bargaining Stabilization Fund Two of the priorities of the Honorable Town Council's Fiscal Year 2016 Budget Policy Guidelines read as follows: • Finalize the Comprehensive Plan for the Town dealing with a broad spectrum of issues, including development,zoning,design guidelines, and transportation, in order to encourage Town government and its citizens to work in concert towards conunon goals. Develop an implementation strategy for key recommendations in the plan. • Develop plans, including staffing needs, to initiate implementation of a local public transportation system in Watertown to supplement MBTA service, that will both mitigate traffic congestion from new developments as well as providing residents with alternatives to using private automobiles. As you are aware,the Comprehensive Plan will be_finalized and an implementation phase will begin. Part of this process has already begun by the development of Design Guidelines and Standards; and the proposed amendment to the Pleasant Street Corridor District. Discussions will need to be held on prioritizing a series of implementation strategies and many involve Zoning Text Amendments. Additionally, developing plans to initiate implementation of a local public transportation system in Watertown to supplement MBTA service will require the need for additional services to assist with various items including the creation of a Transportation Management Association(TMA), fund and locate bike sharing stations as well as transportation design assistance. Given all of the above,funding of$130,000 for one-time Transportation and Comprehensive Plan Implementation Services is included in this Proposed Amendment in order to provide consultant services to be utilized in coordination with the efforts of the Community Development and Planning Department. With respect to the second item of the Proposed Amendment, as you recall,prior to the close of Fiscal Years 2013 and 2014 the Honorable Town Council approved transfers to the Collective' Bargaining Stabilization Fund to account for monies related to a prior year(s)contract in which an Agreement has not been reached. A similar transfer will be brought forward prior to the close of Fiscal Year 2015 utilizing existing monies within the Fiscal Year 2015 Budget to account for monies related to prior year(s) contract in which Agreements have not been reached. As you are,aware,on April 7,2015 the Honorable Town Council approved a transfer of $1,041,518 from Fiscal Year 2015 Town Council Reserve to fund the Fiscal Year 2015 Snow and Iee Removal deficit, in order to avoid raising the deficit in the Fiscal Year 2016 Budget/Recap.This transfer addressed the highest level of Snow and Ice Removal expenditures in the Town's history. The proposed funding of$400,000 to the Collective Bargaining Stabilization Fund is needed to augment the upcoming transfer to the same stabilization fund prior to the end of this fiscal year, Therefore,I respectfully request the attached Amendment be placed on the April 28,2015 Town Council Agenda as a First Reading amending the Fiscal Year 2015 Budget. Given this Amendment, the Fiscal Year 2015 Revenues and Expenditures will each be increased by$530,000. Therefore,the revised Fiscal Year 2015 Revenues and Expenditures are $113,989,722. cc: Honorable School Committee Honorable Library Board of Trustees Department Heads FISCAL YEAR 2015 BUDGET AMENDMENT INCREASE REVENUE (DECREASE) TO READ UTILIZATION OF FREE CASH $ 630,000 $ 2,630,000 00100970-497200 TOTAL REVENUE ADJUSTMENT $ 530,006 INCREASE EXPENDITURES (DECREASE) TO READ TRANSPORTATION&COMP. PLAN IMPLEMENTATION SERVICES $ 130,000 $ 130,000 0194000-630385 TRANSFER TO COLLECTIVE BARGAINING STABILIZATION FUND $ 400,000 $ 400,000 0194000-596806 TOTAL EXPENDITURE ADJUSTMENT $ 530,000