ORDER-2019-91 : Water Enterprise Operating Budget for Fiscal Year 2020 in the amount of $5,412,677.54 (Five Million, Four Hundred Twelve Thousand, Six Hundred Seventy-Seven and Fifty-Four Cents).

Transcript (~18 min @ 3:08:20)

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▶ 3:08:22 Speaker 6: um order number 2019-91 water enterprise operating budget for fiscal year 2020 in the amount of 5 million 412 thousand six hundred seventy seven dollars and fifty four cents

▶ 3:08:54 Monica C. Medeiros: thank you thank you very much um a couple of questions can you talk about the

▶ 3:09:01 Monica C. Medeiros: the water replacement line 5.27 to 2, it's water.

▶ 3:09:08 Monica C. Medeiros: It's a reduction of 23.1%.

▶ 3:09:12 Speaker 6: And I see we

▶ 3:09:14 Monica C. Medeiros: spent less than 9,000 back in 2000

▶ 3:09:19 Monica C. Medeiros: 17 bills that we spent a lot in in

▶ 3:09:25 Speaker 7: 2018 and we we know what that is so we were required to by the dep to conduct a rather aggressive lead service replacement program we did that we did that successfully in fact again kudos to the department they ran an award-winning lead service replacement program as identified by by waterworks standard in the waterworks industry we don't have to run that program anymore so we're back to doing regular standard water service replacement program so that spike in expenses is not reduced and

▶ 3:10:06 Monica C. Medeiros: accordingly we reduced the line item okay and we think we'll probably uh continue to do

▶ 3:10:12 Speaker 7: some lead replacement yeah absolutely we'll continue but not to that aggressive nature

▶ 3:10:22 Speaker 7: and um and what's the malden 99 line so malden supplies water to that stretch of melrose on route 99 there are a couple of accounts most notably aggregate and waste management so we there's a meter at the town line there between malden and melrose we we monitor and meter the amount of water that enters into melrose and malden sends us a bill we we we invoice the bellrose customers and we pay malden for that water okay very good and um the salary and wages

▶ 3:10:56 Monica C. Medeiros: line here in this budget it's showing a 3.4 percent increase um that's uh mostly basic uh

▶ 3:11:16 Speaker 7: basic changes in some of that contractual yeah a lot of it is contractual so the employees the the the workforce um they see a two and a half percent cola they have step increases in addition to that cola um so don't so don't the clerical union members and um so the majority of that is all

▶ 3:11:39 Monica C. Medeiros: contractually driven increases and are the new positions in here at all in water yeah yes no

▶ 3:11:48 Speaker 7: in part of the proposed there is a there is the executive assistant position with a portion of the salary um now being attributed to water and sewer and when that position is filled

▶ 3:11:57 Monica C. Medeiros: that person could help you for instance preparing all the meeting stuff right and so i think that

▶ 3:12:11 Speaker 5: it certainly um would be helpful um and i'm sure needed so you can do other things and in

▶ 3:12:24 Monica C. Medeiros: yes in this budget we're seeing a decrease in postage by 10 and i sorry i realized in the indirect costs that have been handed out for this budget there's um one of the lines that was previously posted slash soft software which is previously basically software has been increased to add postage and has gone up is that just a shift in where the postage is coming

▶ 3:12:56 Speaker 7: well my reduction is simple we estimated high on what we felt the community would how the community would respond to monthly billing and when the community didn't respond as aggressively as first thought if you look at the fy19 budgets i printed out and passed that there is surplus font there are surplus funds in those existing lines that's why i proposed the cut in the budget and you'll see an equal cut in the sewer budget for postage okay and maybe mr delaruso can

▶ 3:13:25 Monica C. Medeiros: just uh talk about the addition of postage to the indirect costs between 19 and and 20.

▶ 3:13:41 Monica C. Medeiros: So, in the other section, it says postage slash software, but before that was really just kind of like software licensing.

▶ 3:13:59 Speaker 4: Oh, postage slash software? I think in, so what was your question again? I'm sorry.

▶ 3:14:04 Monica C. Medeiros: So, in FY19, that line was less, and it did not include postage. It just said software licenses. so I'm wondering why we're adding postage and what I thought perhaps it might be to offset the decrease in this budget and again I'll confirm this view

▶ 3:14:26 Speaker 4: but we're using the exact terminology that is in the template I think this one here principally is software because I think you saw the number of 39 for 54 64 I'm sorry for fiscal 19 and then 46 580 and I would suggest it has to do the new software the new hardware and software that we're upgrading from munis because they also take a portion of that so as that cost goes up it should reflect a higher cost

▶ 3:15:01 Monica C. Medeiros: for software for that because we did purchase the upgrade to munis is this including any are we

▶ 3:15:07 Monica C. Medeiros: looking to to use postage as an offset for indirect costs no i'm not i'm suggesting that

▶ 3:15:10 Speaker 4: may not be posted at all i'm just saying if you look at the the way the terminology is on on the actual template um from the munis template no from department of revenue they have it labeled that way but for our purposes we're principally focused on software and i'll confirm that for you though

▶ 3:15:31 Speaker 6: thank you yeah thank you alderman's workshop thank you madam chair so i wanted to um

▶ 3:15:42 Michael P. Zwirko: talk a little bit about the indirect costs as it relates to employees so the packet that you handed out this evening which is voluminous but very detailed and it is appreciated there is a section where department heads acknowledge

▶ 3:16:06 Michael P. Zwirko: my and i appreciate that they acknowledge it and there's a memo that outlines the respective duties performed in the departments that fall that that that could be or are rather build as indirect cost to water and sewer do and I see

▶ 3:16:33 Michael P. Zwirko: that they're their duties but it doesn't seem that that it's a record kept it seems more that it's task based so and we don't do this with other departments right? I mean, so if the city solicitor, for example, is working on an issue in parking,

▶ 3:16:52 Michael P. Zwirko: he's not billing or his office isn't billing the treasurer's office. That's correct. Right. But yet we do that in water and sewer. So I wonder why this doesn't apply to other departments. Because where I work, it's a company of 50,000 employees and we have cost centers for everything. And anytime I work on any item I have to build that associating cost center legal departments do the same so why is water and sewer held out if you look in the

▶ 3:17:23 Speaker 4: packet under section first section it's the city of Melrose indirect cost

▶ 3:17:33 Speaker 4: allocation to services this says overview one two and three mm-hmm two

▶ 3:17:38 Speaker 4: things one is we're not we are not a manufacturing company and that's not we don't record time as such but having said that I'll put that to the side it's I'll just go right to number two this is indirect costs I distinguish from direct costs by the fact that they cannot be assigned precisely which I

▶ 3:18:06 Speaker 4: think is what you're asking, to various municipal activities. As a result, the indirect costs allocated to a particular department or service are approximate rather than exact cost. Sometimes this fact bothers officials who like to have precise cost figures. It is important to remember that even though indirect costs are approximations, including them, and the full cost of municipal services results in a more accurate cost information than if they're not included it goes on to number three it says the direct of accounts may reject any community's methodology written or otherwise as unreasonable for tax rate setting purposes it's an important etc that we be consistent and that we do our allocation which is considered reasonable and fair and that's from the costing municipal services booklet of the department of revenue division of local services so we try to um uh and i think we've done it successfully because history has shown we have from fiscal 13 to today our percentages have not deviated from 11 plus or minus i know what i'm doing is correct because it's been certified each and every year since then if i felt that we were off base and anything um i would definitely bring that to the attention in fact if you look at this year where we i actually reduced my time from 15 down to uh you know because by five percent from last year because i've looked at where we're at and the level of work that i think that's been done has helped me do that because i don't have to get as involved in things i used to have to get involved in because now that i think they're done quite frankly um credited to public works here in a much more efficient manner so those things occur each and every year so we do look at it we try to be consistent we try to be reasonable but um i think that's the best we can ask for and we get again this is provided to everyone the or as well as the outside auditors and um they would be consistent and we have no issues yeah and i just

▶ 3:20:15 Michael P. Zwirko: want to clarify i'm not questioning i'm not questioning the billing of indirect costs to the water and sewer i know that it's not only legal but it's it's it's used by many municipalities so so I get that I guess it was more of the there's an acknowledgment but but not a verification but I do know that and you're essentially saying this in your quote your ending remarks that now there's a system in place there's been policies and procedures that have been developed that previously excuse me previously weren't there there's a rote memory to how we do our business day to day and how the the departments are working in conjunction with any water and sewer activity and

▶ 3:20:58 Speaker 4: if i add to the trick absolutely correct when we introduce monthly billing for example that impacted the treasure collector's office it impacted you know the billing how we do things that there's a trickle-down effect yeah so you know five years ago to say that wasn't there but now you introduce that that affects different people i think it's in the treasures collectors outline to their work so then more time is needed because of monthly billing is it going to be for short time is it going to be for a couple years until we get it you know under wrap and then it just becomes mechanical which is the goal and then you can reduce the time element so yeah absolutely correct so as those elements come in again putting in the new meters for the water replacement that took time that we didn't have to apply before and once that's done that time can be removed that's why this year you'll see it indirect costs are down by over 46 000 dollars so as we they go down we're not afraid to reduce it and the um i was reminded of this

▶ 3:21:59 Michael P. Zwirko: while you were speaking you did provide up this is for mr shena the total um volume used by the municipal um parcels buildings entities but i didn't and i might not have seen it but i don't don't think that it showed a cost a total cost it was just the volume no we

▶ 3:22:18 Speaker 7: track consumption I can I can I didn't know if there was a way to calculate

▶ 3:22:23 Speaker 7: that in between now next Monday I can work to create a dollar I don't think

▶ 3:22:27 Michael P. Zwirko: it's gonna hold anything up I just think a dollar amount as well as the volume

▶ 3:22:32 Speaker 3: would be helpful thank you those are the only questions I had madam chair thank

▶ 3:22:35 Speaker 6: you first time thank you I just wanted to realize that I don't

▶ 3:22:39 Monica C. Medeiros: believe for the these packets that we were handed out earlier today really do kind of affect not just the rates part of it but also the budget side of it and so I'd like to move to include the two memo packages that where we were presented to us tonight one from the John shed to the FY 20 Public Works water and sewer budget presentation information and the other from Mr. De La Russo, City of Melrose Water and Sewer Indirect Costs and

▶ 3:23:17 Kate Lipper-Garabedian: Allocation for Services documents. Okay. Is there a second? Second. Okay, great. So we have a motion to add to the record the two major packets of documents that we received today to this order as well. That was made by Alderman Medeiros and seconded by Alderman Zwirko. All in favor? Aye. Any opposed? Okay and then I just

▶ 3:23:41 Monica C. Medeiros: wanted to just touch briefly on indirect costs here and and the expenditures so the the question you know it came up about why do we do this for water and sewer and not for the other departments and in the the real part of that is that

▶ 3:24:02 Monica C. Medeiros: And the indirect costs are authorized to be spent out of the general operating budget, but we're collecting the money to pay them out of the water and sewer rates. And so we see, for instance, and we're about to have a motion in a moment or two to fund this water enterprise budget where the grand total 5 million four hundred twelve thousand six hundred seventy seven dollars and fifty four cents but there's also an additional allocation of eight hundred eighty nine thousand ninety seven dollars that we don't see in this water and sewer budget it's in addition to it that's in the general operating fund the expenditures are in the general operating budget and so that brings up

▶ 3:24:56 Monica C. Medeiros: the total cost of operating the system and the to a greater amount but it it can be confusing I think to see that yeah you don't know where that money's being spent and there are only certain because this proposition two and a half there's only certain things that we can raise money in addition to the two and a half percent levy limit and there are only certain things that we can raise additional funds for and we can raise funds for fees which an enterprise account is a special kind of account that should just cover the cost of operating the account and nothing more and so it's important that if we do do

▶ 3:25:33 Speaker 5: this indirect billing that it's it's accurate because we are doing this

▶ 3:25:36 Monica C. Medeiros: outside of the proposition two-and-a-half protections that are there for taxpayers and ratepayers so thank you thank you this will have the committee what to recommend

▶ 3:25:55 Speaker 6: we have a motion to recommend the water enterprise operating budget for fiscal year 2020 made by alderman Zwirko and seconded by vice chair Boisselle all in favor aye aye any opposed okay we will do