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HomeMy Public PortalAbout06-24-2014 Collective Bargaining Transfer_201406191527318323 ToWN OF 1630 WATERTOWN Office of the Town Manager Administration Building - 149 Main Street X Watertown,MA 02472 Phone; 617-972-6465 Michael J. Driscoll Fax:617-972-6404 Town Manager www•watertown-ma.gov towrung, hvaterrown-ma.gov To: Honorable Town Council ) From: Michael J. Driscoll, Town Manager ��X 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 2015 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 funds for employee contracts may be encumbered only if the employer and employee bargaining representatives agree to contractual terms by July 15`h 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 matter. 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 $ 985,000 0111152-570780 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. v,r IN) ' DATE TOWN'AUDITbR: TOWN OF 156U WATERTOWN • Office of the Toivn Manager Administration Building t_ ems. 149 Main Street Watertown,MA 02472 Phone:617-972-6465 Fax: 617-972-6404 Michael J.Driscoll wwwavatertown-tna.gov Town Manager rowrnngr(@waterrown-ma.gov 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 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 $ 429,575 0111152-570780 FUND 02 TOWN COUNCIL RESERVE $ 280,425 0211152-570780 TO: FY 13 TRANSFER TO COLLECTIVE BARGAINNING STABILIZATION FUND $ 429,575 0194000-596806 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 Navie8l K.Bal,commissioner e Robert G.Nunes,Deputy Cornissione,&Director of Municipal Affairs cItYand own .-- _44_J h 1 kM a§ 4 fi U7 W le_V$ 15, Volume 21,No.7 August 2008 Special Purpose Stabilization Funds: 4� 111 ', "' 'I ji " �i W. A Long-Term Planning Tool LS Commentary Three proposals Joe Markarian,Director of Technical Assistance,Municipal Data Management of interest to municipalities pushed 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 A special purpose stabilization fund: Best Practices Wellesley uses a to include any lawful 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 cific purpose. However with the adop- long-term. Programs to replace vehi- informed with real-time information . . . 2 tion 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- Focus A 1 0-year look at Proposition 21/a toga of a new management and fund- - Helps a community save money. Rather than pay cash, if the $400,000 i overrides.Are override approvals influ- ng 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$150,000 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 .. . . .. .. .. .. . . . 11 effective planning too]. - Helps a community manage debt.A Mark your calendars for upcoming ng A fund might be established, for in- plan to accumulate cash over time and stance, to pay solely for the mainte- pay outright for a moderate-range cap- training classes. .. . . . . .. . . .. .. . . . 12 nance and repair of municipal build- ital expenditure helps preserve debt Prof ile 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- ment program.A special purpose sta- seen costs is viewed in a positive light Municipal Fiscal Calendar bilization fund might also be set up to by credit rating agencies. September-October . . . . . .. .. .. .. 14 finance a government-wide vehicle re- placement program. For example, if a , guilds resident confidence in gov- community anticipated the need to ernment. Special purpose stabilization purchase a $400,000 fire truck in five funds directly address resident con- years, it could reserve$80,000 a year cerns and provide assurance that allismin a special purpose stabilization fund, continued on page 9 City&Town•August 2008 Division of Local Services•www.mass.gov/dls 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- Creationofaspecialpurposestabiliza- to it. In FY2009, $102,500 (1,025 x pated expenditures. They work best lion fund, and 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 city able for"appropriation"and that entire the community will eventually have to make, like building maintenance, road dential(or similar)committee.The vote "' m must clearly define the purpose of each repairs and vehicle purchases. fund established. Under the amended ,Y ' Building stabilization balances through law, creating and appropriating to a F 1 an override unquestionably involves an general stabilization fund now also re- _ ,,a w' ' " ' - t increase to the tax levy,but special pur- quirestwo-thirds vote. pose stabilization funds provide an im- po tant response to resident's concerns There are two options for building bal- about the absence of long-term plan- ances in a special purpose stabiliza- w ning in municipal government.If consid- tion fund. One is the traditional appro- ered thoughtfully and implemented pru- priation in a budget line-item, or in an dently,they offer a vehicle that can help article, from within the levy or from i other general fund revenues. Balances acommuniry think and act inaforeword p ' .' ' looking manner,and effectively plan for can also be transferred in from other - g'' future costs. existing accounts. A second new funding option is re- For more information, please see the g p DOR Information Guideline Release ferred to as an override, but in fact, t - (IGR)04-201 which is accessible from has characteristics of both a Proposi- the DLS website. Go to www mass tion 21/:override and exclusion.Like an ov dls, click on Quick Links (more) override,additional tax revenue can be and then the Information Guideline Re- raised year-after-year without town- lease link.0 wide or city-wide referendum votes be- yond the year of inception. However, like an exclusion under Proposition 2A the levy limit increase need not be per- amount is"appropriated." For FY2010, manent.Solely through the action each . t - of the selectmen,or city council,it $10,'but my$8 x $102,5 pr r avail- year e, t•�„� j ,V, FI can be continued, lowered or deferred able,but onlyavaila l is"appropriated." entirely and resumed in a later year. In The amount available in Fx $80, now = any event,each year,the amount avail- becomes selectm$82,000en choose x $make no able increases by 2.5 percent. but the selectmen choose a make no 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 21/2 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 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 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 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 §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 clearlv define the purpose(s) of the fund. B. Pre-existing 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. Chanaine Fund Purvose 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 21/2 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 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 Appropriations 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/a 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 Approval of Override Referendum Cities and towns may ask voters to approve a Proposition 21h 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 fundine the municipal capital 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 fundine 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 fundine the town and school overatine budeets, the municipal capital stabilization fund ($100.000) and the school capital stabilization fund ($100,000) 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. Aomovriation 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 levy ceiling of 21/2 percent of the full and fair cash value of taxable property. C. Chanee in Override Purvose 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. -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. Aooropriation 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.