ORDER-2018-193 : An Appropriation from account number 6000-319000 (Sewer Retained Earnings) in the amount of $16,287.90 to account 8415-490000 (Sewer Reserve for Retained Earnings).

Transcript (~10 min @ 3:25:00)

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▶ 3:25:01 Speaker 4: yes um again as i indicated earlier with this appropriation it would uh provide us the ten percent in reserves for both water and so on respectfully both for both of them yes i'd like

▶ 3:25:14 Scott M. Forbes: to make a motion to join uh order number 2018-192 which was just read along with 2018-193 which is the appropriation uh for the sixteen thousand two hundred and eighty seven dollars and ninety cents

▶ 3:25:29 Jennifer L. Lemmerman: for the sewer retained earnings second we have a motion to combine orders 2018-192 and 2018-193 made by ottoman ford second by ottoman mortimer all in favor all right any post those items are

▶ 3:25:44 Scott M. Forbes: joined we still have the floor i still have the floor thank you um so talking about our 10 reserves i know i know we just kind of touched base with that i think moving forward as long as we make that annual adjustment to stay at that 10 that's really what we're looking for now you

▶ 3:26:00 Speaker 4: got through the chair absolutely right we're not looking for hundreds of thousands of dollars

▶ 3:26:02 Scott M. Forbes: any more to plop into these accounts we're doing right this year is is 20 20 grand absolutely not

▶ 3:26:11 Speaker 3: okay um and just for the record for the last two fiscal years in our calculations we have have not raised any funds to put towards reserves all right and originally this was a five-year plan and we

▶ 3:26:19 Scott M. Forbes: completed it and i believe four so we were a year ahead of the curve um so just just to go on

▶ 3:26:31 Scott M. Forbes: reserves i i look at it this way where one where one capital improvement project gone wrong or one bad year of these funds possibly being depleted correct i mean just given in any in any given year

▶ 3:26:43 Speaker 4: you know and it's so true and again through the chair to all of them what a great point because as i indicated in a previous meeting this also takes the stress off the general fund for the bond rating agencies because should an event like that occur and you didn't have the capacity to address it your general fund would be the responsible to do that and that's just not what you want to do if you don't have to god forbid but um that's exactly why you need them

▶ 3:27:09 Scott M. Forbes: okay and one of my final questions is if we wanted to be more aggressive per se and continue to go forward with maybe additional i i projects um what what would what would the opinion be if we were to tap into some of those reserve accounts to do an i i project that could potentially make us i don't know it'd be more advantageous through the overall assessment than our

▶ 3:27:33 Speaker 4: competitive communities great question through the chair to the ultimate i see them as two independent entities i don't blend or mix either one of them because particularly first of all the reserve which i indicated earlier the reasons why we want to maintain that secondly is looking to do more I I with the existing staff what's required to do that and the costs associated with being able to manage additional I I we haven't even talked about that's why it's a separate and distinct subject because respectfully to to this superintendent there's only so many projects with the existing staff that we have I believe John if I'm wrong correct me that we're able to manage successfully, so we have to really think about it. I'd love to do 10 million in I.I., for example, but I also know what would be involved in trying to manage that and what the impact would have on my office, the treasurer's office, and obviously on DPW. I don't know if John wants to add to that.

▶ 3:28:37 Speaker 3: No, and if you talk about using reserves to fund I.I. projects, that's something that I don't know if I would support. I think the risk outweighs the benefit. risk of not having reserve funds is um we lived through it so we're kind of little we're a little biased towards it but the dor could not approve a tax rate and they came really close to doing that five years ago and i was in the room um our reserve account that savings it it's essential to running these enterprise systems i i don't think we need to exceed 10 but i would never like to see it go below retained earnings that are above and beyond the reserve that's that's a

▶ 3:29:20 Speaker 6: discussion point i think something that we could actually consider absolutely i think that's

▶ 3:29:23 Speaker 3: something that i even mentioned in committee towards the end of our meetings um that i i'd like to reconvene the committee in the fall and see where we stand and and maybe add to what we just voted on tonight to some extent with those funds but that that's something i would support but not using the reserves i'm very happy to see them at 10 and i'd like them to stay for

▶ 3:29:45 Scott M. Forbes: a considerable future at that level okay and then one other thing just to consider too is that if we're tapping into all of the available funds through the mwra assistance program any additional capital improvement project we do is on our own dollars right we're not getting any more additional grant funding than the ones that we applied for am i correct in saying that correct so these projects would actually be more of a cost to the city however if we did have those funds available we'd have to do the analysis and see if it's beneficial for us to pull the trigger

▶ 3:30:16 Monica C. Medeiros: or not right right okay thank you thank you all the members thank you uh so so following up on that the the 412 i actually that was the total i guess 412 429 dollars in water retained earnings for fy18 and 379 450 for sewer retained earnings so that's we're taking from that to fund the reserves tonight correct which is just um so you know that leaves

▶ 3:30:54 Monica C. Medeiros: well over 350 000 in sewer retained earnings and you know well over 400 000 in water retained

▶ 3:31:08 Monica C. Medeiros: earnings and that seems like a lot of money to like if we don't use that now it goes into next year's calculations and we can't access that again until the end of next fiscal year is that correct

▶ 3:31:21 Speaker 4: yeah through the chair but you may not get it back because just says you see on the general fund free cash there's a whole host of offsets that apply um that they takeaways from your general fund balance your unassigned fund balance is here and then there's takeaways from that part of that undersigned fund balance would be the 300 000 for example carried over but then they would look at what encumbrances we have what offsets we have so what happens is it whittles down to what they consider an available fund taking out all these takeaways so you know and I always stress that even on the general fund I always stress that you know it wouldn't it's not a reasonable to see the general fund have 3.3 million for example as we saw this past year and fund balance at the end of the year unassigned if you want to use that term let's use that for tonight but also to see a million dollars offset so you only end up with 2 million in free cash because of all the takeaways so even though you rolled it over when they get done with the takeaways the encumbrances for example chapter 90 funds that are not we haven't sought reimbursement for that that's a takeaway from free cash even though it's all it's all there and it's nothing we did that's a takeaway so I always caution everyone don't it's not and I would love to do it but you can't do that you can't ever assume anything because it's not your decision to make they will advise us the Department of Revenue based on our balance sheet on our encumbrances on what we have written receivables etc what they would consider blessing as a free cash because once it's done then obviously they're responsible in that way so they have to be sure that what they're giving us is reasonable and accurate the great question did you

▶ 3:33:14 Monica C. Medeiros: considered putting any of that either of those funds into capital stabilization

▶ 3:33:26 Speaker 3: so that we could so we spoke to what could we do with that funding and

▶ 3:33:30 Monica C. Medeiros: actually that's one of my questions what could we do with that we elected to do

▶ 3:33:34 Speaker 3: is to close the fiscal year because we still have fiscal 18 expenses that we have to cover we haven't closed our fiscal year we have projections that you know make us feel comfortable right now a lot more comfortable than we were five years ago that we will make the fiscal year but if we don't that's something those retained earnings could help us absorb any deficit that this fiscal year and you're not going to know that until the fall but come the fall i think it's going to be one of our first discussions of you know okay where do we stand how did we close fiscal 18 where are we projecting our retained earnings to be and and you know do we want to use some of them um towards capital investment and that's a fair it's a fair discussion it's a discussion i look forward to having and um and but you know within that discussion we're also going to talk well how much do how much do we want to spend and how much of it do we want to save so that we're

▶ 3:34:34 Monica C. Medeiros: in a good position this time next year as well yeah i know you you know mentioned things like

▶ 3:34:41 Speaker 3: aging fleet in your budget um it's a good discussion to have um how do we spend our money as opposed to are we going to make it so i'm happy i'm happy and i look forward to having it

▶ 3:34:55 Speaker 5: and if some you know god forbid some fleet piece of equipment give out in the middle of the fiscal

▶ 3:35:00 Monica C. Medeiros: here we can can we draw on this or no by the vote of the board absolutely we have to be

▶ 3:35:05 Speaker 4: absolutely absolutely you can vote on that thank you thank you

▶ 3:35:19 Scott M. Forbes: here's before you uh motion to move uh bottom line on orders 2018-192 and 2018-193

▶ 3:35:24 Jennifer L. Lemmerman: we have a motion to recommend for passage for the combined orders made by alderman Board seconded by president Search all in favor aye aye any opposed move forward to the full board