ORDER-2021-33 : Request for update regarding the City's finances

Transcript (~1 h 9 min @ 1:26:10)

Speakers identified by voice; unnamed voices are numbered within this recording. Auto-caption text — verify against the video.

▶ 1:26:03 Speaker 9: Thank you. I appreciate the council's paper. As we go through this, we are now adjourned and stay tuned for, I guess, finance.

▶ 1:26:16 Leila Migliorelli: ALL RIGHT. WELCOME BACK TO FINANCE COMMITTEE. I WANT TO CALL THE ROLL AGAIN. CAN EVERYONE PLEASE MUTE? THANK YOU. I DON'T HAVE TO CALL THE ROLL AGAIN. SO WE CAN JUST GO RIGHT INTO THE FIRST ORDER ON OUR AGENDA TONIGHT IS ORDER 2021-33, A REQUEST FOR UPDATE REGARDING THE CITY'S FINANCES. IT WAS FILED BY COUNCILORS GUERRIPE AND COUNCILORS TRAMONTOZI. Madam Clerk, I believe Patrick, we can bring Patrick back in, but in the meantime, is there a motion to suspend the rules?

▶ 1:26:51 Mark Garipay: For Mr. De La Rosa, make a motion to suspend the rules so we can hear from Mr. delivers a second motion to suspend the rules made by Councilor Garrett based seconded by Council. Madam clerk.

▶ 1:27:07 Speaker 1: Yes. Yes. Yes.

▶ 1:27:18 Leila Migliorelli: Yes. Yes. Yes. Yes. Great. Thank you, Mr. De La Russa, for coming back on for our Finance

▶ 1:27:25 Speaker 6: Committee meeting. Thank you. And again, I appreciate being here this evening. And I thank you. I am hoping this evening a couple of things. First, I'd like to close the loop from the presentation of the outside audit to James Powers, who's the partner of the firm. And he did say he's so correct. The audit is literally never ending. From the time we initiate an audit to the time the audit actually is ended, there's no room in between in a terminal exercise in study, in exercise and activity um so i want the city the council as well as the general public to understand the extent of it and i would be remiss to if i up um i also do want to make a note that that's not the only audit activity that goes on within the city and again this is a little bit outside of mr power's presentation we also have reviews by bond council the official statement by a certifying bank, PORS rating agencies, which I'm going to talk about this evening, the Department of Revenue, Division of Local Services, Department of Education, all types in every year required by law. The amount of agencies and activity that not only audits, but also proves the work is really, I think, outstanding. We have quality people looking at auditing, questioning on the financial statements on a regular basis from all different angles, and the numbers must tie out from one agency to another key finding. the numbers have to be consistent and they must be audited figures approved by the outside auditors period but they don't show up in the financial statement

▶ 1:29:42 Speaker 6: um thank you again i'm i'm glad um actually that we can talk about this mid-year um budget overview and i appreciate a lot of questions i did receive some from some of the councils i'm not gary thank you in particular a couple of questions on the forefront um I begin asking everyone to take a look at the letter I did send out. The memo, I believe, was dated January 2021. And I do want to tie this to the standard and pause rating, which I also believe you have, and get a little bit deeper into what I believe is necessary I'm going into the next school year fiscal 22, because that's where we are right now. But I think it's important that we revisit what we did in 21 and why we did it. And now, as a result of your actions and your boats. Where do we stand as a city? Did we make the right.

▶ 1:30:46 Speaker 6: As we embark on 22, did we do the right things? Candidly for the right reasons that's why I believe tonight's. Discussion I do hope there'll be questions and interaction. To the extent allowed impossible. Become 1 of an understanding of the impact. That the decisions you make as as a city council, and we make as management. Roll into the ultimate outside world, the 3rd parties, the rating agencies, the banks, the official. Statement and so that they can, they understand why we acted in the consequences of our actions. Each action as a consequence, and I think when we talk about some of this information tonight, it'll come to light. Just how important those decisions are that we as a community. So, if I, if I can begin, I do want to look at some of the assumptions and again, the memorandum. outlines them the get-go where we actually began in 21 and if i may we started to develop this year's budget based on the governor's state aid figures for the city they have receiving in excess of 830 000 in new state aid principally driven by the revenues we see for the new student opportunity act chapter 70 which is considered educational aid this would have resulted in a significantly higher bottom line for both the school department in the city from the two percent increase

▶ 1:32:29 Speaker 6: shortly after that announcement the coven 19 crisis unfolded and the commonwealth was thrown into an unanticipated negative fiscal position where local a estimates made just months earlier the cities and towns simply would not be possible. The economic effects of the COVID-19 had taken hold. This is the first time the city has been faced with such a challenge. We have experience in how to address these negative downturns in the economy, and a AA bond rating from Standard & Poor's attests to this fact. We are in a solid financial position to meet this challenge today. You take a look if you have a moment at some point to review the standard and pause report data, September 15 and 20. and again, I bring it up because if we pass the budget in June for July. 1st. This report from standard imports took. That information, it took the audited information and it said, what does that mean? To the market, what does it mean to your bond rating? This came after the city council voted its budget for fiscal 21. What they said, and I'm going to paraphrase it, consider stands in a pause global rating assigned it's double a long rating, but they stable outlook to the city of Melrose, Melrose and talks about the credit overview. Melrose entered the national recession triggered by the COVID 19 pandemic with a stable credit profile thanks to a high reliance on local local property taxes

▶ 1:34:21 Speaker 6: with historically over 98 which we expect will continue in an affluent residential tax base they went on to say on page two under environmental social and governance factors which apply to all we evaluated Melrose's environmental social and governance risk relative to the city's economy financial measures and management in its debt and long-term liability profile we acknowledge absent the implications of the pandemic that we consider the city's social risk in line with those of the sector in addition we view its governance risk as in line with those of peers and environmental risk with the sector standing they talk about mellows is very strong

▶ 1:35:16 Speaker 6: management good financial policies they want to say on page five that the city's adopted budget

▶ 1:35:32 Speaker 6: for 2021 assumed some minor decreases including a 12.5 percent reduction in state aid estimates and 50 reduction in new growth estimates however overall the budget represents a two percent increase over the previous year melrose's budget flexibility is strong in our view with an available fund balance in fiscal 2019 of 12.1 percent of operating expenditures for 11.4 million

▶ 1:36:26 Speaker 6: dollars the again their interpretation of how we acted um is significant if you go to the next page it talks about it in my memo said when we developed the fiscal 21 operating budget We formulated this budget with full acknowledgement that the governor's day-to-day figures were out. This, again, was to our advantage, and that we had notice of the declining financial landscape prior to submitting the budget to the City Council. That does not always happen. Although no one knew for sure the extent of the reduction we were to receive, we do know the Commonwealth has received over $2.7 billion in federal aid to assist in meeting its revenue shortfall. Our direct share of this distribution was just under $2.5 million, which we have applied the costs associated with the COVID-19 pandemic for both fiscal 2020 and fiscal 2021. March 1st, 2020 through December 31, 2020. These funds are in addition to any relief we realize from FEMA reimbursements from the federal government which covers 75 percent of eligible expenses the kids grant which we received covers 25 of those not covered by fema to the extent of fund availability this is important because these revenue streams were not made available to the commonwealth or to this city the last time we had a significant recession that is another significant plus in our column and i just received notice today today that they're considering increasing the percentage from a female reimbursement from 75 to 100 percent so what does that mean to this thing again this talk about a moving target um the possibility is that if in fact they fulfill this um Bill, then we may end up having an additional allotment of additional funds that we can use within the city that currently we've allocated towards funding the 25% of our responsibility for the FEMA money. So, again, FEMA pays 75%, we pay 25%. We're using 25% of Kears Act. If they tell us, guess what, BME is now going to cover 100%, and we're also hearing discussion that it may even go retroactive back to March. Then the CARES Act money that we have, which now has also been expended for another year, we don't have to spend it by the end of this past December last month, they gave the cities and towns another year. so now that money may or portion may become open again for other expenses related to this pandemic again for the city of Melrose that's another opportunity that we want to take advantage of and again unlike other cities and towns we we took all our CARES Act money in at the perfect up the time that we did prior to the first of the year so we took in the 2.4 million of kids that almost 2.5 already in the bank it's already in the city we've spent about 80% of it they have about 20% unexpended it does not mean it's not allocated it means that we have it's still unexpended and now that we have an additional time frame with which to spend it the MIT that takes a lot of unnecessary stress off a lot of departments so again if we take a look at what we did here we use the full new tax revenue from the tax levy again I'm on the second page we use half of the new growth that we realized from the prior fiscal year which was $300,000 less than we took in in fiscal 2020 we took a um anticipate a loss in state aid of 680 000 or 12.5 percent of unrestricted government aid from fiscal 20. and again we use no more than 75 percent of our total recurring local receipts which we'll talk about tonight realized in fiscal year 19 as the building blocks for the 2021 budget. In developing this strategic plan, we also work with Jim Powers, our outside auditor, and we went through it pretty thoroughly as to approaches, methods, strategies to minimize exposure, to reduce any negative consequences of actions or market downturns, and or reductions in state aid that would exceed exceed the 680 000 that we had already budgeted for um so we had done that we also we are due diligence of the mayor's office and obviously the city council we put 2.5 million dollars into our stabilization funds i do have a handout that that I provided everyone with the balances as of 1230. We now have over $6 million in our stabilization funds. If I may quickly, the regular stabilization fund, over 3.1 million. Contract stabilization fund, 925,919. Capital stabilization fund, 348,656. Suits and Claims, $285,441, OPEB, $753,852, Special Education Fund, $530,243, and the OSHA Fund at $100,299.34. And again, they took notice that we did this, we took this action, the greatest increase in the Stabilization Fund history for the entire city of Norwalk. We've never had balances anywhere near this ever in the history of the city, and we did this at a time when cities and towns were struggling just to keep staff working. We were able to use our funds strategically and set them aside to provide an additional cushion should outside events cause us distress fiscally, which would have interrupted our level of service to the community. So we were strategic, it worked, and it was to our advantage, and the bond rating agencies took note of that.

▶ 1:43:30 Speaker 6: In fact, specifically, they highlighted our reserve balances, it says for fiscal 21, the budget does not include any fund balance used for operations, and management did not need to draw down reserves by fiscal year end 2020. As a result of our expectation for continued budgetary performance strength during the next fiscal years, our assessment of fund balance reserves will likely remain very strong. This tells the outside world, the people that buy our bonds, and they keep our interest rates low, it tells them we have reserves set aside to protect us from contingencies that other communities just don't have.

▶ 1:44:17 Speaker 6: didn't happen by accident and again one of the top priorities of this administration is always to provide stable level of services within its funding capacity um we have accomplished that the 21 budget just over 88.3 million it's two percent higher than fiscal 2020 again it was the lowest percentage increase in 10 fiscal years the lowest percentage increase in 10 fiscal years We have not now, or in the past, asked the City Council to make reductions to budget line items in an effort to balance the budget. The budget submitted to the City Council is structurally balanced at the outset. What does that mean? That the budget itself stands on its own, does not need to be reduced, does not need to be altered, it would not be in front of you if, in fact, it was not balanced. That's our obligation as management is to provide you a balanced budget. What does a balanced budget mean? It means we go to the Department of Revenue. They'll certify it. They'll set our tax rate in January. They'll say your revenues meet your expenses. We consider it a reasonable expectation. And again, we have maintained a balance for the remainder of 2021. I see nothing changing that, nothing altering that. The school department was able to see an increase of over 646,000, the budget. We met state mandate and net school spending requirement is always out there. We have to adhere to all existing solid financial policies that we've developed over the years. And that have got us where we are today. We do not deter in any way or reduce our obligations. To our benefit, our city's 95% residential, even though that means we have a limited room for commercial and industrial that actually work to our favor. The communities that are struggling today are the communities that are highly dependent upon industrial and commercial. And when those areas sort of have fell to the wayside, not to causes of their own, but just given the economy in general, it's been felt in the community. And I think that that's not going to go away overnight. So, again, structurally, our tax base this time, being 90% plus residential, was an asset to our ability to withstand this last pandemic and the negative consequences it actually did have. And in general, again, how much our tax revenues make up of the big picture? Just under 74% to run our operating budget. State aid is about 16.6%, and the remaining money comes from local receipts and other available funds, just under 10%. And on page 4, so the council's information. The estimated state aid reduction that we actually received, and again, this is the 4th. I believe it's the 4th version since inception. They hit this number has been changing and changing and changing. Oh, literally in front of my eyes. Over the last 2 or 3 months, but where we are today as of today, this is the number. It came in at 317,205. Reduction for about 46.6% and we get anticipated, which was 680,000. So, to the city's benefit, there was a 362,795 all the positive variance. This is very good news. If you take a look at the cherry sheet analysis that I provided to the council, this 1 here.

▶ 1:48:22 Speaker 6: It's great landscape. I do want to touch on 2 items on the last page, but on the 1st page, I want to talk quickly about what it actually means. It breaks down all the revenue that the commonwealth provides the city on the cherry sheet does not mean it breaks down. It's not all the revenue we get. It's just what is comes into the city through the charity. 1st is chapter 70. 8Million, 514,496, there was no increase for them from the prior year. So they kept it level to fiscal 20. The number on the second section under general government, unrestricted general government aid, $5,445,804, that's level to 20, no increase. Veteran benefits, 204, 514, and 20, and 183, 404, we saw a reduction in veteran benefits. Again, that's not based on the pandemic. It is based on what we submit to the Commonwealth for claims and what they'll actually process within that time frame. It's generally about a year and a half behind from the time it's submitted to the time you get your reimbursement in general. So the bottom line is we actually saw an increase in aid to the city on page 1 of $146,251, under 1%. Then when you turn the page, here's what's interesting, when you turn the page, assessments,

▶ 1:49:58 Speaker 6: and the first large one you see is transportation, which is the MassBay Transit Authority, $631,477. So it'll be less than 20 small amounts. Underneath that, you'll see the annual charges against receipts, and the big one is tuition assessments. is the charter school assessment in fiscal 20 it was 2 million 939 268 and what is it now 21 3 million 362 265 it's 422 997 higher with 14.39 so at the end of the day under net state a which is all that matters that's all that matters the city actually um received less 10 million 874 067 fiscal 21 than they did in fiscal 20 which was 11 million 191 272 or 317 205 on the decrease it's a 2.83 percent decrease um the budgeting that we did when we used that 12.5 percent here was um right on the money it allowed us to absorb this loss and then we had actually a positive variance and i want to share with the city council what that means and the big term the big that really means that you'll be able to use state aid money to fund your budget without having to use your local receipts to buy that amount of money because that came over and above so that's again works to our advantage so if we have less local receipts because of you know you can't um book the hall as often as we can those kind of things that occur well a lot of that's going to be compensated by the additional state aid we're receiving so it were again that was another positive move strategic move to allow that to happen so that worked out perfectly and number seven new growth It came in at $623,925, or $323,925 more than the $300,000 that we projected. This, again, is very good news. So by coming in over $300,000 more, that's brand-new growth to the city. We didn't anticipate it. Again, it's unbudgeted revenue. We didn't budget for it. And that's to our advantage, once again. And the last, but not least, which we can talk about in more detail to the council as we go through it, will be local receipts. And for the last three fiscal years, local receipts for fiscal 18 was $9,979,947. 19, it was $9,041,593. And in fiscal 20, it was actually $9,112,048. eight does not include the one million dollars that we got in for the waste management payment for our 10-year agreement so it actually committed a million more than that but on average for the recurring revenues in general we bring in over nine million dollars in local receipts we only budgeted about six point billion or about 69 percent of the three-year average again that's 200 that's 2.75 million dollars less than the average so the city took an um again another conservative approach um protecting ourselves from the economic factors that we have to face but that we don't control so another kudos to the council on not only the budget itself who does for the council on the stabilization effort and both proved noteworthy to standard employees so those actions that we take at budget time again is to reverse the tape have a direct impact uh on your interest rates so you guys um really really play a dominant role there so thank you personally thank you for staying with the program and making that happen didn't happen by itself and as we all know there's a lot of alternatives and other things we'd like to do but the way we operate here we stay within our margins um having said that i do want to talk a little bit about mid-year actual revenues and again i'm going to talk budget to actual budget to actual as right now because we were at with property taxes um We're about $23,417 greater than what was actually on a budget basis and what was budgeted. And that's pretty consistent to what we see in prior years. So, again, we're an extremely healthy community in that way, and we collect, you know, 98 plus percent on our property. so we're in that sense we're not exposed in a negative way local receipts as of december 31st 2020 to what was budgeted again just about 6.3 million dollars we have brought in 45.2 percent to date and with 299 690 shy of being exactly on the target of 50 percent 50 percent now what's driving that again let's talk about a couple of items one we are seeing reduced investment income the rates are about half of what they were a year ago investment income is one of your drivers for local receipts we are seeing even rentals we're not seeing the rental income we have in the past from memorial hall for example and other venues that were consistently producing um occupancy etc simply because of the pandemic however candidly with the rentals overall we had an estimated two hundred thousand um mid-year the hundred thousand we've already taken in 107 338 so we're actually 70 338 dollars ahead in in the big picture so even though there might be less individual department programs overall where do we land or what do we budget the key is what was budgeted and will you realize that and finally i'll probably talk a little bit about um uh cannabis i do want to just mention quickly we brought in about 50 000 from recreation we just got notice of it the other day which we haven't had here before in the city so that's going to help offset some of the loss that we may experience in rental and other areas motor vehicle excise it's not where it needs to be and again that's a timing issue i think as jim powell has talked about timing we expect our full commitment on february february 1st and generally a motor vehicle we bring in about 3.6 million on average over three you know a year we're budgeting about a million dollars less so um i am not anticipating any surprises and i don't have any i might i have no exposure my opinion in local receipts or motivated whatsoever um meals tax um we have seen a reduction in in the uh some of them for obvious reasons again not not a great deal um which is interesting but um for example second quarter for males tax last year we took in 168 000 216. this year it's 132 657 so there's a 35 000 reduction um but a little bit of that is offset by the fifty thousand four hundred and sixty one dollars that we've taken in that we've never had before for the cannabis tax so in a good way that um timing was actually very good there in motor vehicle uh believe it or not even though all the commitments aren't in we're actually ahead by about forty thousand by seven percent same time last year And we can go through these, if you'd like, permits, et cetera. Permits are down about 30,000 to date, 369 versus about 339 overall. Again, timing is an issue sometimes here from the time that the work is done to the time the checker actually makes it into the bank, say but um it's not a uh my material a lot of money we typically do over 700 some more thousand permits and this year on a budget basis we're actually only budgeting 500 000. so again no more than 75 percent where we actually take in of the prior year this this council um i had used the numbers he took in in fiscal 19 because i know 20 would be skewed a bit and actually this this it's going to be a little more challenging to do apples to apples when you know there were different programs and use fines and penalties and those kind of things um to help people get through and and uh timing can be a you know has been an issue but this is still tells me that uh the cities is on target i see no reason whatsoever where we're not going to meet our expectations not only in um local receipts but throughout the entire budget process and based on what i've seen right now um the pleasant surprise be the additional money if it does materialize that the city can realize if they uh allow us to go back to march and use those expenses for uh fema instead of having to use our cares act money um there was some questions about that um because i'll be happy to answer any questions on that as well i believe back in november i sent out a detailed information on that itself um unfortunately it's not a closed operation in some ways it's good it's a moving item which um we have to keep up with but i see no negatives here i do know that we have um the recreation evolving fund and some others like that that count on programs i know i've spoken i've spoken with frank myself he's been extremely sensitive on the programs that he offers the revenue he takes in and the expenses that he's incurring and again that's another victim of the pandemic but he's managing in my opinion um as well as going to expect no different than memorial hall and the library etc um so i'm open to any questions

▶ 2:01:39 Leila Migliorelli: from the council and i appreciate your time thank you mr de la rusa any um questions from committee

▶ 2:01:48 Mark Garipay: members councillor Garipay thank you uh thank you mr de la rusa thank you uh for your detailed report and i appreciate you touched on uh most of most of my questions that i sent out um

▶ 2:02:08 Mark Garipay: when we're talking about um we're talking about local receipts um we have um you have the general fund local receipts which would take probably memorial hall cemetery um permits and then you have stabilization accounts um i'm sorry not stabilization accounts which um you touched on for rec which we know is probably your local receipts when you said uh we're at six million uh six six six million 264 is that including the revolving local receipts or is that excluding

▶ 2:02:41 Speaker 6: those excluding those okay revolving funds sit outside that um figure they're self-sustaining the person can spend up to the limit that the council approves um they cannot spend any money if they don't have any money in there sometimes there's a misconception if the council approves twenty five thousand dollars but the department can go out and spend twenty five thousand dollars that's not the case the money has got to come in first then they can expend it this is not it will pay you back later this is we'll pay you can't pay until you have the money in the in the uh

▶ 2:03:17 Mark Garipay: So, just a quick question regarding, like, the school department rentals, they go into a revolving account, which they, in return, use it towards their budget, correct?

▶ 2:03:28 Speaker 6: Well, it depends. I know that it's more than on the school department rentals. It's a different scenario. There are some requirements that some of the rental money is used for a lot of the programs that they're running, also for maintenance, upkeep, the buildings, et cetera. So we could get that specific for you if you'd like, Council.

▶ 2:03:58 Mark Garipay: Yeah, I'm just curious, as we move forward, are we going to be running, are we going to have to finance that a little bit on the city side if you're going to put a budget? And also with regards to the REC, if the revolving account is not bringing in the revenue, I think as we start coming out of this pandemic, that's a department that we're going to want to really invest in as we move forward with getting children active and outside. So, my concern is that we run a deficit, not a deficit, but we're not bringing in enough money. I want to make sure we keep an eye on that account to make sure that we were capable of providing those services. And I think we need a more now more than ever as we start coming out of this pandemic for the youth of our community. And 1 other quick question regarding the charter school assessment you touched on. Is that based on is that based per per a student or do they go up? They go up on cost per student every year.

▶ 2:05:08 Speaker 6: Combination of both it is based on number of students again. They have their exotic formula. I call it. I don't think I've met anyone that walking on the earth right now. They can really explain it. The, it is, it is formula based. It is number of students based. The concern that I always have, and again, I just for the state for the record is that it's not a. Criticism in any manner, shape or form put any child to school. I think they're wonderful and they do. They work. It's just a matter of how the funds are provided. Where, in my opinion, again, over the years, I've seen that the public school student does not get the per student. Allocation provided the charter school, and I think that that can be a cause of concern. And that's where, if you hear comments made that the cities are suffering, or they don't, you know, they're losing out because there's more charter schools. it really means they're not getting the per pupil that the charter schools get to support the operation. And that's the hard part. And I understand there's probably no easy answer to that. And I also know there's a reimbursement component. The state provides, and I believe it's back to three years. We have so much percent over the years. However, that goes away, and the city's left holding the back three years for 100% of it based on the duration of the students. There's no easy answer to it. I know they have talked about it, counselor, of amending it over and over. I guess it's more complicated than most. It's a working process, that's all I can say about it.

▶ 2:06:48 Mark Garipay: Thank you for the information. Thank you for the detailed report. I think it was very valuable to let us all know where we are six months in. I have a couple of other things, but I'll probably just send you an email. Thanks.

▶ 2:07:02 Speaker 6: That's perfect. Anytime. Thank you very much and I appreciate your input. I do. Helps me do my job.

▶ 2:07:13 Speaker 1: Thank you. Councilor Tramontozzi. You're on mute, Councilor Tramontozzi.

▶ 2:07:22 John N. Tramontozzi: Thank you, Madam Chair. I appreciate it. Mr. De La Rosa, thank you for coming in and giving us a mid-year review of our finances. It does look like we're in pretty good shape. But I just have a question regarding the balance of the local revenues in the state revenues necessary for the budget and according to your report. If I'm correctly, our budget relies on 16.6% of our budget 16.6% of that is represented in state reimbursement state revenue.

▶ 2:08:05 Speaker 6: State revenue. That's why I could look on the cherry sheet, the amount of money that we're getting that next day. That's that number that represents about 16.6% of our total revenue to support our operation.

▶ 2:08:17 John N. Tramontozzi: And we did learn that the state aid, there was a reduction, but we budgeted anticipating that reduction of 362,000 is that I'm reading it. So there was a reduction in state aid than what we anticipated, but we budgeted accordingly.

▶ 2:08:38 Speaker 6: You are 100% right, council. We assumed actually $680,000 reduction in state aid. It came in less, which is to everyone's advantage. That's going to be money come into the city over 300 plus thousand tolls that we did not budget for. That's unbudgeted revenue. And that came that's going to come to our bottom line counselor and it was too. It was a, it's a, it's really great. It really is. Great. Thank you. But can you put on your magic hat for future forecasting?

▶ 2:09:16 Speaker 9: Is that possible? So, yes, it's a fair to say that we can anticipate that state aid reduction to continue with the fist for fiscal year. 2022.

▶ 2:09:26 Speaker 6: um actually the news on that is this the news is that the information i have today is telling me that they're going to increase increase the unrestricted government aid that would be the 5.445 million that we have right that's right here they're going to increase that by 3.5 percent

▶ 2:09:52 Leila Migliorelli: Which is 190,000 dollars when 1 of you are speaking to the other 1 of you mute because it's really hard for the rest of us to hear. Thank you.

▶ 2:09:59 Speaker 6: I'm sorry, counsel it back to the question. What we have heard is that and it's coming out in the governor's budget. They're going to give us 3.5% increase. And that 1 line item called unrestricted government aid, which is 190,000 dollars. They've also said, considering, I don't know how valuable this will be, funding the Student Opportunity Act like they were going to do last year, which would bring new revenue in. However, I do have to put an asterisk there because that is based, the issue we have is that based on the number of students we get in the city, if we have less students than we did a year ago which is my understanding then we'll get less chapter 78 so unless the state comes across and says hey we're going to keep you whole even though you have less students than a year ago we could see a loss in the 8.5 million that we get because they'll give us they could give us less money because we have less students now if that's true will the increase in student opportunity act if they do it compensate for that till we come out whole that we don't know yet but to your question i'm going to really be um interested and see what the governor's plan is i think it's going to be more detailed this coming week or so uh his his full intentions and that's going to play a large role on what we bring to the city council here but i can assure you that it's not going to deviate from past practice counselor i do not have full confidence that this is behind us i don't believe that right now personally and professionally in the sense that we've seen the end of it so i want to be extra cautious again that we take into consideration that this factor is still out there because we saw what it did to us this past year we didn't take the steps we took counselor we would have been in big you know and more difficult straits but um the approach we took paid off and we accepted the fact that we were going to get less data and we did and we did so we did the right thing and i want to do the right thing again i'm hoping that since we've already started the fiscal 22 budget that um that will materialize in the budget that is eventually voted by the city council so again we'll look for your guidance there as well but again a lot of the approach is going to be conservative and careful i think it's going to take another full year to flush it out from what i can see great i appreciate that mr del

▶ 2:12:51 John N. Tramontozzi: I appreciate your forecast and looking forward that we can continue to take a conservative approach to what the state revenues, especially you're going to produce. So, thank you for keeping more than welcome. You're more than welcome.

▶ 2:13:08 John N. Tramontozzi: Thank you. That's all I have for now.

▶ 2:13:17 Robb Stewart: Counselor Stewart, thank you. Madam chair. Thank you. Mr. so for a very comprehensive overview of what we stand here. I wanted to go back to your comments about human being increased from 75% to 100%, and then the cares act. Money might potentially be able to go. Would that money be able to then therefore go to more endemic related activities within the city?

▶ 2:13:46 Speaker 6: Ideally, if, in fact, if we, if we could just talk theory for 1 moment counselor. If, in fact, they do go back to the origination in March when the pandemic actually took hold and this additional FEMA response was made, and they would be $2.5 million. dollars if i can shift that to fema and not use that 2.5 million for cares act which i already have in the bank here in the city then it open up that 2.5 to be used again for pandemic you know related costs and and efforts that would be wonderful so the expectation i talked actually to the uh site auditor before the meeting about that and you know the same premises that he's looking at it the same way is that may be a great opportunity not only for our city but for every other city in town to use that money to help where they desperately need it for testing because a lot of it will be directed to testing i think and i believe that that need is just going to expand but you're absolutely correct i would i would look to use that for all types of testing protection gear sanitization the whole nine yards and efforts that maybe we couldn't do all we wanted to do but could we didn't have all the money we needed that would be a great way to use that money a great way because i believe that the state doesn't really want that back because they i think it's better used candidly from local locals know what they need to use their money better than the state and we know in melrose where our needs are and i believe that's the best way to approach it if i was um you know a betting man

▶ 2:15:32 Robb Stewart: Thank you for that, Mr. DelaRusso. One, you mentioned a number of areas where I think the money could go to benefit. One additional area that I've heard from some of my constituents is their concern about the vaccination. And not that we have necessarily direct control over the vaccine itself, but the planning for getting that out into the residents, the communication, the ability to help residents that are going to be, I think of most need for the vaccination. I believe it's the 1st targeted group is people over 75 years old, which we have a good number of people within the community. I'd be strongly encouraged. That if we do have access to this, this kind of money that we do consider almost immediately a plan of action for the vaccine, in addition to the testing and the and everything else that you spoke of. Thank you for that. I also wanted to go and just have a clarification on that about approximately 10% loss in the net benefits. that is that is a a net reduction based on submission of uh benefits uh as opposed to a loss or reduction in benefits is that correct mr dellarosa benefits on on the particular um

▶ 2:17:09 Speaker 6: on the veterans benefits oh yeah what that's just um endedly i mean 75 of what we actually submit to the commonwealth they'll give us so when you pass your budget say it's 200 000 then and if we actually incur 200 000 in expenses for the list for the commonwealth the eligible expenses they'll give us 75 back and that's where it comes in but the money you're seeing coming in now was from a prior year probably a year and a half ago what was submitted pulling ball it's just the nature how that gets um reimbursed but there's no um no one's out there in the commonwealth reducing that by any any manner shape or form it's just it's just a matter of what we submit what we get reimbursed for it's not being harmed by what's happening with the pandemic is what we're saying

▶ 2:18:05 Robb Stewart: it stands on its own okay thank you for that clarification mr dylan my last question is regarding, you had talked about the fiscal year 21 receipts. I know you went into a lot of detail about that. I do very much appreciate understanding the variance based on the effect of the pandemic. And just to clarify, you said that we are 45% to date, and that would be based on the fact that a projection would be at 50%? Yes. Am I understanding that correct? Okay.

▶ 2:18:36 Speaker 6: And again, you know, candidly with some of those, you know, the local receipts, given their nature, and as, you know, as the nature of those receipts, it's timing based, calendar years change, operating budgets.

▶ 2:18:58 Speaker 6: i do have a print was sent to the council for every department and so if you take a look at this and i obviously i have um feel free by the way counselor to go through if you have any questions then please don't hesitate to contact the department head do an email or call or if you can't reach them feel free to call me i'll be happy to find out what i can but again um this really shows us that we're really in line where we need to be pay periods is 27 paid periods for the first half 25 for the last half sometimes you get exactly 26 26 and then these budgets that you for the period end of december is 50 50 percent in salaries basically to see a little bit higher because of the extra week the way it lands but it's made up at the last half of the year it's just a timing thing because the count and when the dates like july 1st when is that fall on when is june 30th fall on those things we have to live with we can't change those but um again it's uh timing more than anything but the revenue that we have um is pretty standard like i said the last three years we've gotten over nine million dollars and opening seats on average and that's a again a great great place to be a great place to be

▶ 2:20:25 Robb Stewart: thank you mr delver so and and thank you madam chair thank you any other committee members for

▶ 2:20:36 Leila Migliorelli: the first time seeing that not opening up to others uh counselor Grigoraitis

▶ 2:20:42 Jen Grigoraitis: thank you chair Migliorelli and thank you mr tell russo for being here tonight i just wanted to follow up on a few of the items you had mentioned you talked about having a strategic plan for this year which i'm very happy to hear we have because if there was ever a year to attempt to be strategic it was this one um and you also referenced covid um and i know some questions but over the past couple weeks um administration has raised some concerns about covid costs specifically in In December, the mayor mentioned the school committee meeting, upcoming costs related to PPE, upcoming costs related to vaccinations. Are those costs that you anticipate us being able to cover with what we currently have on hand? You know, I feel like this pandemic is a snowball effect where our costs just ever increase. We continue to need to buy PPE for our first responders and front facing employees. Now we're talking about vaccine clinics. our nurses are probably working around the clock in addition to all of the regular work that they have to do so is there any plan about how to address those costs that have been highlighted

▶ 2:21:51 Speaker 6: great question and um we are um take for one minute on the fema um when the pandemic first kiazak money was allocated to cities and towns they set up provisions for um community testing Right in the regulations, what's happening now and it's a great question is, what is community testing? We have been advised that community testing is what that means, community testing. Students, you know, members of the community would be covered if it's community testing by FEMA. And we could submit those expenses to FEMA. What we're seeing is that some of what we're, in my opinion, what is happening is that Because this thing is a moving ball and these is testing and the nature of the testing is not something. We're seeing a year ago and could have determined was going to be necessary. You opening up some new territory. And I think it's going to cause FEMA and at least locally here to reevaluate the interpretation of some of these. Reinvestments, you know, where does the testing begin and end. How much should be up, you know, how much should be reasonable or unreasonable. But having said that, my, obviously my first intention and effort will be to put as much as I possibly can towards FEMA. FEMA reimbursement, I want it to the point where we want to be advised that we can't submit it even. And that hasn't happened. They'll tell you submit it and keep your documentation. because if we're having this issue here i can promise you every single community in the commonwealth is working this in an effort to undertake um this process exact same concerns exact same issues they're not going to just hear from us they're going to hear from wakefield the whole nine yards malden because everyone's in the same boat and if you try this is you know community testing versus what is not i think it's going to be very challenging for any large agency to do that based on past experience so the long and short answer is that it's my objective to put as much as i possibly can towards FEMA charge that which means that we would sit in an expectation of reimbursement at some point this past uh sometimes it could take the year two years before you even see any money and i have to accept that too but that's okay i can plan for that um but i i i rather plan for that happening than get any money completely so by the fact that we can work with jim powell is here um on a regular basis and get his input and and his uh you see as he mentioned he just he's auditing what we submit to be sure it's you know no surprises the same thing is going to happen there this is what i'm speaking to you about tonight i will speak to him about we're going to do the exact same thing what's the positive what's the negatives and what's the best approach to take but um in my opinion testing is testing and i think that should be covered by

▶ 2:25:15 Jen Grigoraitis: females thank you it's helpful to know that you think we'll be able to meet any covid related

▶ 2:25:20 Speaker 6: costs that come up i appreciate that and hopefully again through the counselor um so hopeful that frees up the cares act money that'll be another win for us and another whole source of revenue that we can put towards that effort um again it wasn't derived by this wasn't called the city and candidly um i'm hoping that most communities don't take an impact in a negative way did not create

▶ 2:25:51 Speaker 1: i agree thank you thank you councillor thomas

▶ 2:25:55 Cory Thomas: Thank you, Madam Chair. Mr. Villarusso, thank you once again for being so professional and prepared and easy to talk to on the forums. It's greatly appreciated. Councilors Grigoraitis and Stewart asked a couple of questions that I had about FEMA money. I had a question about the recreational cannabis. That $50,000 that we've taken in so far, what is the time frame on that?

▶ 2:26:24 Speaker 6: Well, again, great question. We just got notice of it literally I think it was weeks ago, maybe a couple weeks ago even. Maybe not even that long. That was from probably September when it first became approved, if that makes sense. and to that point to the end of um so we did take that in as the tax uh short time frame but at least it's something that now we know is real and then we can expect some type of revenue on a regular basis um so in that sense i'm pleased to see it that it came in do you think

▶ 2:27:08 Cory Thomas: prorated over the course of a 12-month period you know we might be taking in

▶ 2:27:20 Speaker 6: four times that amount maybe $200,000 it is hard to tell generally you know I look for a year or so a couple years of patent and and see where it lands I don't know cuz I'm not somebody you know my thing I don't know if there's any you what's going to be in on places um what's going to happen to the economy overall and will these places still be um able to do business um given a restrictive nature with the pandemic i don't know but yeah but it's good to know that we should put a bullet in it and keep on revisiting it to see where it lands it's a great question yeah it'll be interesting to see you know um you know the

▶ 2:28:04 Cory Thomas: next time you're in front of us uh if you have additional numbers uh you know and see if you're

▶ 2:28:16 Speaker 6: happy to do that absolutely absolutely all right thank you sir thank you sir um counselor mcmaster

▶ 2:28:22 Shawn M. MacMaster: thank you madam chair i'm an ongoing member of this committee but i did have a question for mr de la rusa uh mr de la rusa you referenced a few times during your presentation uh the audit and the budget and um presumably that's because they're interrelated so i did have a question about the former and that is um section 6.6 of the city charter gives express authority to the city council to retain an independent um auditing firm do you know when the last time was that the city council exercised that authority

▶ 2:28:59 Speaker 6: No, I do not, sir. I can find out, I can inquire if Mr. Van Kampen may have information.

▶ 2:29:08 Shawn M. MacMaster: That would be helpful if you could submit that to the council. And then to the extent you're able to find any information, it would be helpful to know if historically any independent audit that was authorized by the council, was that above and beyond any independent audit uh pursued by the administration um it would be helpful I think for us to know that thank

▶ 2:29:40 Jack Eccles: you Mr. Del Rosso and thank you um Councilor Eccles thank you Madam Chair um I'm also a non-voting member of this committee um Mr. Del Rosso just um you know we talked a lot about how we're in a good spot and our stabilization accounts look good um can you recall a time in Melrose where we've had a net drawdown in the stabilization accounts it seems we might have some capacity to that for that um we're in such a good good place and kind of what did that look like um

▶ 2:30:13 Speaker 6: yeah great question council um if we just talked in in just in front of you sir but But the, to my knowledge, since I've been involved, we've never, I have never drawn down or asked the city council to draw down a dime on the stabilization fund itself. We have taken drawdowns on the contract stabilization fund. We try to maintain that at a certain balance because as contracts come up for collective bargaining, there may be retroactive payments. So that one you'll see drawdowns. I think we did one time probably five or six thousand for the fire department for a two or three year time frame. Um, capital fund again, um, right now it's got 348,000 that 1, as, you know, as you as you as is voted for capital items away. But we'll always try to keep in there about 500,000 that would be ideal. Because of the nature of the how cities and towns operate. Suiting and we have almost 300,000 that may be access in the event that we do in the city. And Mr van camp and obviously city college would come before you. Oh, we haven't touched that has so in a 53,000. That could be used though, ultimately, if necessary for health insurance cost, and we'll put that on record. I believe that's the only eligible. The actually could be used for to cover health care costs, special education fund is going to be 530,000. That for the school, we have drawn that down. I think when superintendent was here. We took about 450,000, but we restored it. So that we always has 500,000 plus. So that as those situations come up on special ed, we'll have the money to take care of. For the kids, and we won't be looking for that kind of money mid year. Which is difficult to find at that level and oh, sure again, the brand is good over 100,000. We have not drawn down anything on that 1 yet. But I'd be remiss if I was saying that I next year's program is probably going to ask you respectfully to. Um, maybe have some movement into a couple of these funds, um, for the on the positive side. The specific, um, but no, since I can recall, I've never asked for drive down on stabilization for operating.

▶ 2:33:00 Jack Eccles: In my history. Awesome. Thank you. And then just 1, 1 other question about the marijuana revenue since it's pretty new. Uh, 1 thing that I'm just kind of thinking. I had read recently that one community dedicated a certain portion of their marijuana revenue towards funding their affordable housing trust. Is that something that council could explore as far as a dedicated stream for that revenue going forward?

▶ 2:33:28 Speaker 6: I'd be happy to look at if you have an opportunity, if you can recall the community, I'd be pleased to get the information and and run it by um a lake see what what would be involved i'd be happy to do that for your council

▶ 2:33:44 Speaker 5: thank you i'll um i'll shoot your email thank you so much thank you absolutely any other counselors

▶ 2:33:57 Leila Migliorelli: for the first time okay seeing none what is the will of the committee motion to place this on

▶ 2:34:10 Leila Migliorelli: A SECOND. SECONDED BY COUNSEL TAMACHOZI, OR IS IT KRISTEN?

▶ 2:34:23 Speaker 1: SECOND, YES. CHAIR MCNAUGHTY-ARELLO?

▶ 2:34:28 Speaker 2: YES. VICE CHAIR STEWART? YES. DR. GARAFAXX?

▶ 2:34:32 Speaker 1: YES. DR. MOLODY?

▶ 2:34:39 Speaker 1: YES. PRESIDENT PINELLO? YES. OKAY.

▶ 2:34:47 Leila Migliorelli: The order will pass as we heard at the next full council meeting. Next on our agenda is order 2021-71, reappointment of Melissa Ripley as assistant city clerk for a one-year term, said term ending on March 1st, 2022.