ORDER-2021-110 : An Appropriation from Free Cash, account number (01-324001), in the amount of $1,150,000 (One Million, One Hundred Fifty Thousand Dollars), to various stabilization accounts as set forth herein.

Transcript (~24 min @ 27:28)

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▶ 27:25 Speaker 4: Councilor Garipay? Yes. Councilor Grigoraitis? Yes. Councilor Stewart? Yes. Councilor Jamaleddine? Yes. President Cinella? Yes. Nine yes. Motion passes. So we are

▶ 27:42 Jeff McNaught: down to our final order of the evening that is order 2021-110 An appropriation from free cash account number. 0, 1 dash 3, 2, 4, 0, 0, 1. And the amount of 1,150,000 dollars. To various stabilization accounts as set forth here in. And I believe we have Mr. here, the city auditor to answer questions. He had presented on this at an earlier meeting. And provided a memo, I believe it was dated May 27.

▶ 28:19 Speaker 6: Yes, perfect. Good evening. Hope you can hear me, um, hope all everyone as well and thank you for allowing me to be here this evening. Um, and to the chair, if I may, um, I believe I. I distributed a memorandum dated May 27, 2021. Regarding reserves and stabilization funds and management. And what I was trying to do, um, quite clearly was to identify the nature and purpose of each fund, the expectation for the shot in the long term. And, um, give some more depth to, um. The request period, um, I believe it's pretty self explanatory, but again, I'm here to answer any questions if I can't answer the questions tonight. I promise. I'll get back to you as soon as possible.

▶ 29:16 Jeff McNaught: thank you thank you mr de la rusa do any counselors have questions for mr de la rusa

▶ 29:30 Jen Grigoraitis: council Grigoraitis i'm sorry i had a missing mouse for a minute there thank you chair mcnaught thank you mr de la rusa for being here i just had one question on the um suits and claims stabilization fund i believe the articulated reason for the request to move money into that account is related to our waste management contract And I just was curious if we're, which would be that if we were to. Exit that contract prematurely that there would be a fee that the city would have to pay. Is that something that you anticipate happening? I wasn't aware of any. Concerns with that existing contract, but I wanted to hear if the city had concerns about it.

▶ 30:12 Speaker 6: That's that's an excellent question counselor and. I recall that when we made this agreement with waste management, I think Mr Van Campen actually provided a memorandum on dated April 5th, 2021. Requesting this appropriation. Be made and specifically to your question, we received an advance payment of 1Million dollars into the city. Which went to local receipts. And ultimately to free cash, the, um. At the beginning of the process, we made a determination that. We would set aside a certain amount of money at the appropriate time, which happens to be this year. From free cash from which it originated. And set it aside in the event that whatever reason the contract is not. lived out was full term we would have an obligation to pay one hundred thousand dollars per year for all the years that in fact it did not complete its term so we were asking two hundred thousand dollars at this time to be set aside strictly into the suits and claims stabilization fund in the event that should something um occur that would cause the agreement not to be fulfilled to September 2029, we would have resources by which to apply to the obligation we would have to pay back waste management for the unexpired term basically of each year. So that was the purpose. We did exactly what we said we were going to do. We didn't request that the money be spent somewhere else strictly to be put in this fund.

▶ 32:07 Jen Grigoraitis: Thank you. And if it's so assuming it's moved into that fund and we. Fulfill the contract to 2029 and don't exit early at my. What then happens with that money that's been put in a stabilization account to for a need that no longer hopefully exists come 2029.

▶ 32:27 Speaker 6: Yeah, excellent question. A couple of things. 1 is that the nature of the fund itself allows it to be utilized for any suits and claims within the city. In the event this was to, we looked ahead and here we are, you know, 8 years from now, whatever the case may be. And there's 200,000 while the money, the money can stay within the fund money can actually be voted, I believe, to a separate fund, another fund, another purpose. Who the city council, if that's the will of the council at that time, but also candidly, I think it does provide. For to the outside world, the institutions that look at us and and and that. Raid us that we didn't make a provision. We just didn't ignore the agreement and our obligation under the agreement. So we can always speak to those people, whether it's standard affords or movies and say. This is the action the city took recognizes an underlying liability. We did not ignore it. It's like, we don't ignore open. We did address it. We put funds, which we thought was sufficient at that time. And that goes a long way no different than the contract stabilization from the others. It shows that there's an inherent desire to do the right thing.

▶ 33:51 Jen Grigoraitis: And to accept the liabilities, thank you for that clarification.

▶ 33:59 Shawn M. MacMaster: Thank you Mr. chairman. Good evening. Mr. so good evening. Just so it's clear to the public, there are 2 matters before us tonight. Correct suits and claims and contract stabilization.

▶ 34:12 Speaker 6: I believe there's a number of funds before you this evening through the chair to counselor. I believe the foundation stabilization fund itself. If you look at my, if you have an opportunity to look at my memorandum.

▶ 34:28 Shawn M. MacMaster: I think I think I may be missing something because I have the April 7th memo in front of me that lists. those two stabilization funds. So just so it's clear to me and clear to the public, would you just review the particular funds before us tonight?

▶ 34:44 Speaker 6: Absolutely. And I believe the memo that you made referring to is one that was put out earlier that from Mr. Van Campen in essence, that we work with him to identify the, he was interested specifically in the Suits and Claims Stabilization Fund and also the Contract Stabilization Fund which you'll find on both of those so i believe that may be those two um counselor but i would be happy to go over um one by fund request before you this evening and gravity certainly the first one is the foundation stabilization fund number 8401 um we're asking that the sum of 400 000 go to this fund which would bring it to just over 3.5 million dollars the next one is the contract stabilization fund 8404 and again for the sake of brevity this would have been the balance to oh right now the balance is nine hundred and thirty thousand dollars this would be an additional two hundred thousand dollars to that fund if approved the next is capital stabilization fund number 8405 the balance is approximately 350 000 and again here we're seeking to add two hundred thousand dollars with the council approval and there is some identification also on item number three that potentially would be seeking the council uh authorization to use three hundred thousand dollars of this fund in the fall to address the Horace Mann School Loop Project as a 50% match to an MSBA grant program should that materialize? I'll keep going unless there's additional questions, please feel free to stop me. The number fourth one is the suits and claims, which we just briefly talked about. The $200,000 again, relative specifically in this case to the Waste Management Agreement with the City of Melrose The 5th, 1 is the old pet fund number 84 and 7, the balance is over 779,000 dollars here requesting 100,000 dollars be added to the fund. And again, this, this, this 1 in particular. Is 1 highlighted. Each and every year now by standard employees that they want to see that we're making a. Proactive effort to address the liability. Liability now is in excess of 150Million dollars. So, we're asking in this case for another 100,000 dollars to be added to the fund as we continue to to demonstrate not only with the budget, but also with these free cash. That we recognize our liability and that we're doing what we can. To fund that liability and the last 1 is the OSHA fund. The current balance is over just over 100,000. We're requesting the sum of 50,000 dollars be added to the fund. And again, ideally, as with the other funds that we've identified, we have, we'd like to see a standing balance at any point in time. Of 250,000 dollars in that fund. Um, overall. The if approved. in line with the additional increase in the budget that we saw previously with the stabilization fund in opeb it would bring the balance to just over 6.9 million dollars for the city um if approved

▶ 38:33 Speaker 2: thank you thank you mr del russo thank you mr chairman thank you council mcmaster i had asked

▶ 38:41 Jeff McNaught: the clerk um to share that table did you make it so that i could share it madam clerk is that what

▶ 38:53 Speaker 4: you did was it just on screen it wasn't i'll try it again if unless raise your hand if you'd like

▶ 38:57 Jeff McNaught: to see it i thought it would be good to show to the public but i took a little too long in requesting that. Sorry, Mr. Teller. I probably didn't know. Please. I mean, in so many ways,

▶ 39:08 Speaker 6: candidly, through the chair, respectfully, this really helps. This is really a backbone of your finances in so many ways. It supports so many different aspects of the operation each and every year. And it provides financial flexibility that so many cities just don't have. and um we're very fortunate to be able to even have the conversation this evening

▶ 39:37 Speaker 4: it's attachment b in the packet labeled fy 2021 stave fund balance revolving

▶ 39:46 Jeff McNaught: i believe it's the the last document down absolutely correct the last shot

▶ 39:57 Jeff McNaught: So, but while people look for that, I've got Vice Chair Eccles, Councilor Migliorelli, and then Councilor Stewart in queue. Am I missing anyone?

▶ 40:08 Speaker 2: Vice Chair Eccles.

▶ 40:10 Jack Eccles: Vice Chair Eccles Thank you, Mr. Chairman. Thank you, Mr. Orissa, for being here. I just kind of have a general looking at like the journey of the stabilization in aggregate over the past year. I have kind of a general question. Looking at a memo i'm looking at specifically the order from here that was fairly similar to this one where we brought the stabilization accounts from a total of about 3.5 million up until about 6.1 it had just been mentioned that you should probably keep stabilization around five percent of your operating budget i think is what i read there um so i'm just kind of curious like how this moves and so if we ended last year or we ended this process last year with about the balance we have now and now we're going up to 7.2 which is about eight percent of our operating budget i'm just been wondering you know over the next five years can we expect the percent of our operating budget to increase let's stay around 80 um will we kind of just add to it because having like that on the council for one year about we've we've rarely drawn from it and we've only added a significant amount so i'm just a little curious about that certainly it's an excellent question

▶ 41:22 Speaker 6: um first and foremost we the five percent figure that um is referenced pertains only to the foundation stabilization fund number 8401 not the funds in the aggregate um there's many reasons for that um but that's the principal reason right now if we took a look at the fund we have for stabilization just that fund alone um you'll you'll notice that where in fact i highlighted it here the balance is over 3.1 million um the goal again is five percent so in fiscal 21 that amount would be just over 4.4 million dollars and the objective here is as the operating budget increases to to to follow that with increases in the stabilization once we hit that five percent um then that's where we'll level off it's it's so similar to what we've done with waterman saw once we hit that 10 threshold that's it we're there we just make with some maintenance effort versus a growth effort two different things and that's the objective with this fund is the exact same thing it's a maintenance effort each and every year as resources become available to bring it to that five percent level that's what they look for and that's what our goal is so there is a different end game here there's no it doesn't go on infinitum um and if we talk about for example the contract stabilization fund which is quite interesting um to the outside you say gee boy you have almost you know 930 someone thousand there i'll just make a note of information for everyone here in the public some a public safety contract that is out because they grew up for three years which we've had in the past that one contract that one unit can exceed 600 to 650 000 one unit one contract um one unit so in perspective as we work through different collective bargaining agreements etc we really are very sensitive to not our effort is not to approve that type of duration because it's not helpful to the city it's not helpful in my opinion to anyone to do that so we try to settle in a reasonable way um so that we can reduce the amount of retroactive payments however if in fact we do end up with the retroactive payment whether it's one year or two years whatever the case may be more hopefully not we have a resource by which to pay it and you are not corrupting any operations of the city to do that you're not laying off people you're not reducing staff for the rest of the year that doesn't happen because you have a provision to avoid that from happening you've seen it here you know year after year we don't do that here but it also takes action so you don't do it here again and that's what we try to accomplish with that fund which is that's why that again is the reason for for the request that we're making thanks that made a lot of sense and

▶ 44:43 Jack Eccles: one other question i just have is so that base stabilization fund is fairly flexible ray whereas the other can you kind of describe the flexibility there versus kind of and and possibly some of the

▶ 44:59 Speaker 6: limitations on the others just i'd be happy to yeah that's a great question absolutely yeah the foundation stabilization funding 401 can be used for any lawful purpose and that's a broad purpose city in school whatever the casement it's a very broad purpose it can't only can be used to fund capital can be used to fund other items um again in the event that the city does use that best practice says you need to establish a plan basically to pay it back over a certain amount of time so that you can demonstrate that the use of the fund was um for purposes that typically wouldn't surface year after year and that you recognize that the contract stabilization fund that we just talked about it was designed and voted to address contracts union union obligations within the city different than the stabilization fund a whole different thing the capital stabilization fund again designed to um address capital purchases in excess of twenty five thousand dollars pays you go financing a lot of people reference um this fund is pay as you go and again it's there again for specific purpose these are all specific purpose funds that that was voted and established to cover these areas of of need at any particular time i think we all saw what happened recently with the special education fund almost 500 000 for the school thank goodness we had it there and again it took proactive proactive motion to make that that money in that fund to create the fund that we did that as a community all of us together because we know at some point that need would be there and fortunately we had addressed you know we had sufficient funds to cover that suits and claims we've just talked about again a specific fund suits and claims opeb fund um that's really a stat detroit fund under chapter 32b section 20 that's designed to address the um outstanding liability for health insurance for for the city that again under a separate statute osha fund number 8409 again that was set up through the city council here um to address in fact uh order number 20 it was order number 2020-79 at the time It was established to address any needs related to training, support, professional assistance, equipment purposes necessary to comply with any and all required workplace OSHA guidelines. That was set up by the City Council. So they all have this specific purpose, Councillor. It's a great question. I look at them as completely independent And I believe that the way we address them should be independent because the need is unique in each one.

▶ 48:06 Speaker 1: Thank you, Mr. Eccles. Thank you, Mr. Chair.

▶ 48:10 Speaker 2: Thank you, Vice Chair Eccles, Councilor Migliorelli.

▶ 48:15 Leila Migliorelli: Thank you, Mr. Chairman, and thank you, Mr. De La Rosa, for being here tonight. Absolutely. I just wanted to ask a clarifying question from Councilor Eccles question. So, is it that 5% is not the standard of how much we should be having in stabilization accounts and it's now 8% or, or 10% where we can just a kind of a quick answer to that question. Be helpful for clarifying for.

▶ 48:39 Speaker 6: Yeah, the chair to the great question. Yeah, the 5% pertains to these regular stabilization fund specifically. On number 8,401 area, not to the other funds, not in the aggregate. They're all set up for a different purpose and scope.

▶ 48:58 Leila Migliorelli: Okay, thank you for clarifying that. Um, and then my, I just have a. Wanted to for the purposes of the public kind of refresh everyone on where we're at with free cash. Um, since this is the stabilization of funds, or it's about 1.15Million going out or free cash. And just want to review that with, um, with everyone that we've. Already approved 1.193Million in a combination of appropriations meetings and city council meetings for the year. And then. We still, we had this money held as well as another 50,000 and there are some more about 2.6Million that's. Requested that we haven't yet come through, which still leaves. There's still like a variance of 230,000, which hasn't been.

▶ 49:54 Speaker 6: Um, okay, is that correct? I'm doing the chair the concept all funds for free cash have been allocated for specific purpose right now. If in fact, all the requests were approved by the city council to be 0 for cash left.

▶ 50:08 Leila Migliorelli: Okay, but I'll just take a look. It takes some time to look at that myself. Thank you.

▶ 50:13 Speaker 6: You know, for the questions, thank you very much. Great question.

▶ 50:16 Speaker 2: Thank you. Counselor Stewart.

▶ 50:18 Robb Stewart: Thank you Mr. chairs this time. I would like to. Motion to recommend 2021 dash 110 to the full concert.

▶ 50:31 Jeff McNaught: 2nd, so we have a motion to. Uh, move the bottom line made by counter Stewart motion to recommend seconded by the counselor. McMaster.

▶ 50:46 Jeff McNaught: On discussion, seeing none, Madam clerk, will you please call the roll.

▶ 50:50 Speaker 4: Chairman not yes. Yes. Vice chair Eccles. Yes, consulate. Yes. Consulate McMaster. Yes. Council of yes. Council of Grigoraitis. Yes. Consulate. Yes. Counselor Stewart yes. Councilor Jamaleddine? Yes, yes. President Cinella? Yes. 10 yes.

▶ 51:24 Speaker 2: The motion passes. Mr. Del Rosso, thank you for being here with us this evening.

▶ 51:29 Speaker 6: And thank you, and thank you to the Council again. I appreciate all your patience and time. I mean, it's a lot of work, a lot of effort, and I say thank you candidly. Thank you very much.