INFO-2023-11 : Update on the Status of the City of Melrose’s Finances

Transcript (~1 h 8 min @ 1:22:46)

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▶ 1:22:38 Leila Migliorelli: My suggestion in leading this meeting is that we've given that we had I feel like we fully covered the arpa. Peace. Although I'm happy to entertain questions on that. I think that let's start with the state of the city financial since Mr. Della Russo put together a detailed memo on that that's in our packet now. so

▶ 1:22:57 Speaker 4: we will be taking up info. 2023 - 11 and if there are any

▶ 1:23:10 Leila Migliorelli: if Mr deller so you have any opening remarks any updates you want to share from our December 18. Yes procedurement.

▶ 1:23:15 Robb Stewart: Should we need to make a motion to take this out of order?

▶ 1:23:19 Speaker 4: Sure. Yes, let's take a motion to make this and so moved

▶ 1:23:23 Leila Migliorelli: I can get motion to take this out of order made by counselor Steward seconded by President Grigoraitis all in favor any opposed?

▶ 1:23:31 Speaker 4: Okay, so info 2023-11 is now from us.

▶ 1:23:36 Speaker 3: Thank you very much. I appreciate being here this evening and my favorite topic is always Finance. It wasn't always like that when I was younger, but it is but it is I do have the chief assessor and my treasure collector with me this evening. If you have any questions on any items related to the respective Fields, they're here to answer them. At least they will get you an answer if they don't have this evening. When I put together the memorandum data, January 26th of 2023. and update on the status of the city's finances again Council order information 2023-11 and what I'd like to do is walk through this and highlights some of the items that I truly impact the community a few of them. We've talked about earlier this evening, but I think it wouldn't hurt to. To restate them because of the importance. To begin with the physical 2023 budget utilizes state aid revenues for the city of 16 million. 889 742 And state assessments at 4,838-455. The next state a to the city again FY 2023 is therefore 12 million over 51 to 87. Those figures have us received one million 396 132 a new state aid. a 13-point ten percent increase over FYI 2022 Principally driven by the revenues. We see through the new student Opportunity Act Chapter 70 under educational Aid. We're hoping that also. mom happens in fy24 That would be really helpful to this community. In addition, here's the building blocks that we utilized. the new tax revenue from the two and a half living 500,000 of new growth 7.1 million of local receipts that we talked about earlier this evening. And 2,698-206 of other funding sources. In developing this strategic plan. We had also requested an increase in the amount to be deposited into the city stabilization funds. We had requested 1,225,000 be deposited into those funds prior to July 1st 2022. It was approved. As requested by the city council, and we now have over 8.3 million dollars within our Collective stabilization funds. We have done this collectively and I could not have done the city could not have done it without the support of the city council. I appreciate that wholeheartedly. To assure the community that we can sustain and manage services in a negative economic downturn.

▶ 1:26:37 Speaker 8: Which I believe.

▶ 1:26:39 Speaker 3: From everything I know today that we are going to face going forward.

▶ 1:26:45 Speaker 3: One of the top priorities of this Administration is to ensure that the city of Melrose can always maintain a stable level of services within its funding capacity. We work to develop strategies that will accomplish that goal in a must remain a number one priority for this city. As a result the total FY 2023 operating Bud for the city and the school is 95 million 286-080. We have not in the past as the city council to make reductions to budget line items in an effort to balance the City operating budget in large pot. As a City operating budget is always developed using conservative estimates and balanced period we anticipate maintaining a balanced City operating budget for the remainder of FY 2023 We will however need to request that the city council provide the school budget a free cash supplemental funding appropriation for a special education in transportation costs in order to close out its operating budget for the fiscal year. This would need to be done prior to fiscal year and we also adhere. To the existing solid Financial policies in the use of the upcoming free cash program. That have been developed over the years in The community's Prudent investment policies and practices that have earned us a double A Plus Bond rating from Standard and Poors. We've been able to maintain that since 2013 and Beyond which is really telling given all the ups and downs that can have occurred over the last 10 years. We also recognize that the National Economic landscape is creating concerns over the fiscal health of the economy overall. And ultimately this can impact local cities and towns budget negatively. For Melrose where our tax base is predominantly residential 92% and where there is limited room for expanded commercial Industrial Development. It may actually work to our benefit in these economic challenging times assuring stability of our tax base revenues that support our budget. Historically and communities that may be overly reliant on commercial or industrial taxes to support the budgets when a recessionary like period takes hold as some have suggested is upon us. Now. It can very well negatively impact those communities which are so reliant on the tax revenues these businesses bring We will say.

▶ 1:29:34 Speaker 3: Number four for FY 2023 overall our tax revenues two and a half plus New Growth make up 73.5% of the estimated gross revenues needed to fund our fy2023 operating budget an estimated State assessments. We have seen that number grow over the years to where it is today. The state candidly is giving less and we a candidly paying more. period i state aid is estimated to provide approximately 16.8% of the needed funding. And the remaining 9.7 comes from a local receipts and other available funds. For FY 2023 new growth came in at over a million 82,000 or over 582,000 more than the 500,000 projected. Our average over the previous five years has been approximately 646,000. This is very good news. The next section discusses in in high level the summary we were at we were actual and where the variances are. A for property taxes 36.7 estimated at this time. We're at 36.3 with a 428,000 negative position on on the tax collecting at this time. Local receipts estimated 3.5 where it actually had a 3.8 which is 266,331 over the mid-year estimate. So our Enterprise 4,567 734 actual four million 431.047 136,686 deficit. Water Enterprise three million five twenty one. Oh, eighty two estimated three million. Five fifty three 153 actual the variance is 32,100. Mount Hood Enterprise estimate is 877.049. And the actual is one million three one seven three five four seven, which is 440,000 308 to the positive. And last but not least the endless Enterprise at 577065 actuals at 6:14 832 for 37,767 to the positive. So these numbers are spelled on a detail at the end of this report, which we can review. at that time The community impact on cannabis the mayor did speak to it. And again, I do want to address it a second third time because he's going to impact us today this year next year and the years ahead period

▶ 1:32:33 Speaker 3: we may not realize the same level of What's called the host Community impact phase as we saw in FY 2022 due to the changes in Law chapter 180 of the acts of 2022. And the new rules around host Community agreements and FY 2022. We realize 955,000 in such revenues which is representative of the 3% of the gross sales from God and remedies. I would defer to the city solicitor's office to a pine in more depth on this matter to the city council. The new law gives the Cannabis Control Commission until November 2023 to promulgate new rules. This information is critically important as we develop bfy 2020 for operating budget for both the school in the city. And unfortunately, it's going to have a negative impact on a local receipts which were used to fund our budgets. If the payment is reduced significant or in fact if the payment stops completely. I have some attachments which I'll just highlighted a couple items in Alaska. There's any specific questions. The first one is the state aid analysis. It's two pages. It's the first page is the estimate of the actual State a by category. And the second is the assessments the charges that we see from the Commonwealth for Charter School MBTA and the like and on the very bottom of the second page. It gives us the net state aid that the city realizes and verify 23. We're going to see one million 396 132 over FY 22, which is a 13.10 percent increase.

▶ 1:34:26 Speaker 3: Go to the next sheet on year-to-day revenues. This is I believe the first time the council has seen this sheet. It's um It actually serves more than one purpose, which I'll explain in a the first section talks about property taxes and again as I spoke earlier. Do you have the original estimate? The year to date estimate the actual year-to-date. And the the Surplus or deficit year today and the percentage in the right hand column? The ones I want to highlight is motor vehicle exercise, which has the highest. Deficit and again, that's a timing issue on the treasuries here. She can speak to that if you'd like. 28.59% 768,831 the next go down. The list is the cannabis. You'll see the number of 615 984 right in the middle of the page. The estimate for the media was 307992. We're seeing 179770 year to date and that shot 128 to 22. We have not received a payment since August and that category. Investment income actually has some good news. The estimate was 7,500 all of the original estimate. He had a date would have been 37.50 and it's we've actually seen a number of committed 94,898. And I had asked treasure collected to speak to that for a moment if she could.

▶ 1:36:09 Speaker 9: It's being offered in the banks that we use last year at this time. We were lucky if we were getting maybe a 0.2 kind of level and now it's more around 4% So I'll give or take

▶ 1:36:26 Speaker 3: the swim Enterprise again a small deficit of 136,686. Water Enterprise is up to 32,100 Mount Hood 440,308 and endless is a 37 767. To go to the next page, which is quite interesting gives you the actuals for the year ago and compared to this year. And then it gives you the variance on the right hand column. and I think you'll find is it's pretty enlightening to see that we're right where we want to be mid-year. Brighten the mid midpoint. So we see our revenues where we want them midi air. We also see our expenses, but we want to see the mid-year. So you really balanced out very well and I have no I have no issues at this time other than the ones I highlighted this evening to be concerned with but if you take a look at The property taxes year-to-date actual was 34,994 107 this year. It's 36 309 696 so it's up 315 189 Ground the next local receipts this time a year ago. It was three million six ninety six. Oh twenty five this year. It's three million eight 18. Oh 70 So there's 122,046 to the better. The saw Enterprise 4.2 million now. We're at 4.4 138,622 higher. The water Enterprise just done to 3.2 million now. It's at 3.5 million. It's 353,890 to the positive Mount Hood. Was that one million 156249. It's now at 1 million 317 3:57 or 161 108. And the ambulance was at 583 for 12. It's now at six fourteen eight thirty two thirty one for 20 to the positive. So your revenues that support you your budget are absolutely where you want them to be as you can see. There's no large large variances, which is what you don't want to say mid-year outside of cannabis, which I consider to be an extraordinary item at this point.

▶ 1:38:56 Speaker 3: The next print out that we provided was stabilization funds and Enterprise Reserve funds. And again, as you can see by fund stabilization a 3.8 million plus the contract stabilization just under 1.2 million before we take out the almost 300,000 that settled the patrolman contract. The capital stabilization funds at 472,299 suits and claims at 496 378 94 opeb a million 38,731. The sped stabilization fun at 502417. That's for the school department. oh sure at 204-105 education Public Safety and substance abuse at 597 815 and again over 8.3 million. The soil Reserve is at 9:29. 808 water Reserve is at 681 338. Mount Hood Reserve is at 4:32 to 25. And the ambulance Reserve is at 148 950 and again I want to thank the city council because we spent five years building particularly the water and soar up to about 10% of their budget, which is our Target and I without that commitment to do that. We wouldn't have those funds there. And again, those are specifically used for those Enterprise funds and can only be used by those Enterprise funds for those for the purposes within that fund. and the next one is just quickly on revolving funds. We've done here is we've given you the fun number. We've all been fund itself the ending balance for fy22. The revenues as of 1231/22 the expenditures as of 1231 22 the balance is as of 1231-22 and what the city council voted for the spending cap. So I would I would glare at the expenditures as of 1231 2022. To make sure that the amount that was expanded by these departments do not exceed the cap that was approved by the city council, which is the last column on the right. Because they should not ever do that. If in fact they need to spend more money. They have to come back to the city council and ask the city council to increase their spending cap, which they can do any time within the during the fiscal year. So even really good stead with the very evolving funds as well. And again no issues there. in the last page is really the other funding sources, which is really a Samsung the taxi population sees that we found with the Commonwealth. Typically, it's the indirect cost of the Enterprise funds care for Perpetual care for the cemetery and Overlay for reval and the last it really is the debt exclusion which is going to be by 2000 and 29 be gone. That was the premium that the city realized on the bond that we took out for the Middle School. And this allows us to use that premium to offset the cost to the tax pay each year of the bond and the couple of years left and that'll be gone. So all in all and I think you'll you'll find you know, honestly what we want to be. You also have a breakdown by Department. That I was provided. So if any questions on that, but they really really look like they're in great shape and for this time of the year, so I don't see anything that would cause me concern right now if that changes in the next quarter, I will let the city council know I'd be happy to come here and give you another report as of the end of

▶ 1:42:59 Speaker 4: questions

▶ 1:43:10 Jen Grigoraitis: president krigeratis. Thank you madam chair. Thank you for that presentation. And thank you, Ms. Armada and Ms. McClellan for being here tonight again to kind of zoom out. A little bit. My first question is can you just give me the ballpark number of what percentage of the city budget is Personnel costs both salary and then benefits indirect anything that's related to the the people that we employ.

▶ 1:43:36 Speaker 3: Um, I I would rather get that to you if you if you're interested in the salary cause anyone to include the health insurance if I made through the chair, this is a question pensions Medicare that type of mm-hmm. I could put that together for

▶ 1:43:52 Jen Grigoraitis: you and give you I mean, my my 10 is I'm just curious to show how much of our budget is really personal treatment by personnel and that obviously when you take that away you're taking away people who do work like there is not a

▶ 1:44:05 Speaker 3: lot of no, I'd be happy to do that. It's a pretty static budget.

▶ 1:44:08 Jen Grigoraitis: Absolutely. Thank you and then I know Ms. McClellan when you were before us to set the levy rate, we talked a little bit about the I typically High year that we had this year in New Growth because of conduits in the ground. Am I getting that summarizing that quickly? What are other things that we you know, our budget is our what our budget is, we know what two and a half does and where that caps us. But what are other opportunities for New Growth that the community could consider or pursue from a tax standpoint? And I know this is a question counselor Carm chadey had asked back in December.

▶ 1:44:47 Speaker 2: so growth is something that's really not predictable in many ways because I think I had touched on it earlier that it's it's very dependent on many things like economic conditions and You know just as Patrick had had said earlier this evening like with say the economy is questionable, you know, even within the short term in the future. We'll see less building permit activity and a lot of you know, we've already started to see that across other communities of Massachusetts. So those are the kind of things that That you know will happen. I don't think it's a lot of it is not like specifically within our our control directly. It's just the activity within the community, you know a lot of Activity from businesses or you know consumers doing building permits and utility companies. Like I said, the personal property growth and things like

▶ 1:45:55 Jen Grigoraitis: that. Okay, so it's not there's not some formula or if you build an Ikea on linfel's Parkway or you that's gonna you know, I think is as I would assume many residents say, how do we how do we change the our story? How do we be a community that has more sources of revenue coming in? What are those options? And it sounds like new growth is not one that seems like there's a clear path there from your perspective. right the Avenues for growth that we've already been realizing are kind of there as they are like we were mentioning earlier that the tax base itself and the way that you know are zoning is and our the way that we are. laid out as of today is you know, it's kind of sets the

▶ 1:46:48 Speaker 2: the I guess area for that. Well, thank you. Thank you madam chair.

▶ 1:46:55 Speaker 4: Thank you madam president.

▶ 1:46:58 Speaker 4: Council grapes. Thank you.

▶ 1:47:03 Mark Garipay: Mr. Delaroso, you had mentioned that the last payment we received on the Cannabis was in August. yes, is that is that monthly payment or is it quarterly or

▶ 1:47:13 Speaker 3: Did it just stop? I believe it's quarterly I can confirm that.

▶ 1:47:18 Mark Garipay: so we would have should have had a payment the end of September or yeah, we didn't

▶ 1:47:23 Speaker 3: get we didn't get the November payment. No, we got nothing.

▶ 1:47:32 Mark Garipay: has anyone reached out to them to see? Why?

▶ 1:47:42 Speaker 9: Don't you get

▶ 1:47:45 Speaker 7: some a little

▶ 1:47:47 Paul Brodeur: bit worse than what you described. We actually got a letter from garden remedies saying that they will they proactively said we will not be sending you any more money and they have sent that same letter to their to the city of Newton and the City of Marlboro. We're there other two facilities are located. They have probably the most aggressive folks in the industry in terms of the position that they're taking but that does other other operators are going a little bit more gingily, but there are certainly other communities. Cambridge Boston Northampton to name three that have Chelsea that either never took or are no voluntarily no longer taking. the HCA payments

▶ 1:48:48 Mark Garipay: And we're on a contract. There was a contract agreement. Between the city and that correct?

▶ 1:49:00 Mark Garipay: I guess probably better questions for the city

▶ 1:49:04 Paul Brodeur: solicitor and I'm assuming that the the again at a base level she's definitely better to ask but the the base premise of the HCA pieces to recover impacts. The contract is a little bit funky and that it asks us to detail impacts, but sets the the revenue piece for impacts at 3% of gross revenue automatically. So it's a little bit of a disconnect there. So

▶ 1:49:35 Mark Garipay: so if the if the Cannabis Commission comes back in November with a What they changed the host laws is that retroactive or is that of them confusing my complicated?

▶ 1:49:48 Paul Brodeur: Okay, it gets complicated. So the legislature changed the law around heas and the eight and the Cannabis commission essentially Works under whatever laws the legislature passes and essentially administers them. They have not issued regulations. Under the under the new law essentially. I think they don't have to do that until November. but it is clear going forward that hea's are dead. That's essentially what what the legislature what the legislature has said. The question will be God. The the CCC is essentially unofficially stated look until we take action. He's Agreements are enforced, but that doesn't carry much weight in court. Based on some of the contract language around that itemization piece. That makes sense.

▶ 1:50:42 Speaker 1: Thank you.

▶ 1:50:48 Mark Garipay: Just noticed on the revolving funds. Mr. Della Russo

▶ 1:50:53 Speaker 1: inspectional services

▶ 1:50:56 Mark Garipay: there's zero in there. Is that because of? We were going through transition in the building building department. As of 12:31-22. There's there's no Revenue.

▶ 1:51:15 Speaker 3: And that could be a couple of things one is pretty simply be a transition in essence or because that's designed for multi-unit. So unless they've done that multi-unit work, but I can find that I'll let me find that out. Okay, that's our

▶ 1:51:28 Mark Garipay: building permits and stuff along that line. Right? Yeah, but it's specific.

▶ 1:51:31 Speaker 3: I believe to in a

▶ 1:51:36 Mark Garipay: lot of ways to multi units. All right, and then on other Revenue Consolidated budget worksheet other funding sources Cemetery Perpetual care 12,000 that's interest on the Perpetual care account. Yes.

▶ 1:51:51 Speaker 2: and

▶ 1:51:55 Mark Garipay: what I would assume with with limited on on over the years we've been limited on interest rates have been lost. So we haven't we haven't realized a lot of interest on that account. Is that changed with everything going on with interest rates going up there at all as are we going to see more Revenue off of the Perpetual care. You think over this fiscal year.

▶ 1:52:16 Speaker 9: We should that money is in a trust that's managed by Bartholomew. The last statement that I saw was a lot more positive and it was the prior year. So yes, let's go.

▶ 1:52:29 Mark Garipay: It's raining where you could send me the balance on the Perpetual character.

▶ 1:52:34 Speaker 1: And that those are all my questions.

▶ 1:52:37 Speaker 4: thank you counselor pay Any other questions? Oh, yes counselor. Karmchatie

▶ 1:52:43 Manjula Karamcheti: Okay, just a circle back to the question president Grigoraitis was asking and a question that I asked. In December. So again just to make sure I understand correctly. I want to say back in terms of growth for revenue for the city that would go towards the operating budget. Some of that would be like businesses coming into the city. Building permits and an increased housing available to to Residents to rent or to buy. Does that count as more Revenue

▶ 1:53:28 Speaker 2: yeah, so Basically the any like change in physical. like Value so it would be like anything that adds value due to like a physical change. It can also be like an exempt. Parcel at being added to the tax role like if some a private. Non-exempt entity purchase like an exempt parcel than they would be added to the tax rule. That would be an example of something. So let me ask a

▶ 1:54:01 Manjula Karamcheti: question based on my question. So for instance in word one we have Project proposal to redo the VFW into Apartments on Franklin Street. There's another the garness market is I proposed will that add to our revenue for the city that would

▶ 1:54:25 Speaker 2: go towards the operating budget, right? Yeah. So any change well, first of all, it would be a changing use because right now I think it's just a fraternal organization. So it would be a change in use so it would be residential and mixed use there be some commercial use. Yeah, so it's any value that that changes that would be a definite

▶ 1:54:52 Manjula Karamcheti: increase. So in addition to providing more housing for people to be able to access our community, it actually also provides Revenue to the city. Okay from growth. Yes,

▶ 1:55:04 Speaker 5: super helpful. and then

▶ 1:55:11 Speaker 5: okay, I think that's all I wanted to. To clarify about that.

▶ 1:55:17 Manjula Karamcheti: and then so in Mr. Del Rousseau in your letter, we'll have a balanced. Budget for the city operation operating budget, but for the school budget, we'll need a free cash supplemental and it lists for special education and transportation costs. There are so many things that that can be regarding special education and transportation. I think it would be really helpful. So I guess a request is to have that broken down a little more in terms of what we say special ed. What do we mean? Is it the out of District placements? What kind of Transportation I know Transportation was an issue during covid because we had to Have more buses for fewer kids because of the social distancing requirements. But so what do we mean by Transportation now? Because that isn't the same issue for this school year in terms of Transportation. So just I think a better understanding of when we say special ed and transportation. I think more information would be really helpful sort of the the numbers behind that so we can understand and feel confident about where that money is going and if it's out of District placements and then had like what are we offering within District? What are we not offering because that is often attention between if we don't have the services for students in school out of District placements will rise and just it's all related and it is it all comes down to money. So just us having a better understanding of that I

▶ 1:57:03 Speaker 3: think would be really helpful through the chair. I did reach out to Ken Kelly the findings directive for the school department nice explain that to him in detail that we want as much detail as possible broken down and the request and whatever categories need to be included. We want all categories included. So everyone is a full understanding of what exactly being voted on and particularly why and send it's an excellent question and I believe that he understands my my position.

▶ 1:57:32 Speaker 5: Well, thank you for advocating for that. It's appreciated. Thank you. I think I'm good.

▶ 1:57:39 Speaker 4: counselor Williams

▶ 1:57:42 Speaker 6: I want to

▶ 1:57:43 Ryan Williams: talk about a couple of the items that jump out of me because they're over. Let's say 25% Yeah, there's really only two. I'm I'm interested in a lot of these over 25's are fairly small, you know, a couple hundred bucks because the line items really small. So let's go up to fiscal Revenue summary the Mount Hood Enterprises of 25% with a 440,000 variants and we talked about local receipts so we know what's going on there, but we didn't talk about the Mount Hood Enterprise. So what's the what's the cause for Mount Hood to be flush with cash at this moment?

▶ 1:58:18 Speaker 3: It's a couple things Mount Hood a little bit different. They're in a calendar year basis. So their operations not when fiscally they are time for range when they'll actually get in membership fees and like a a flux, you know, all the sudden they'll send out their request. They'll get membership fees and a large cash position earlier. So that does change does alter that. That's why I mentioned earlier that those are one of the circumstances that changes things. So I think you'll see extreme line a little bit more evenly as you go forward kind of okay.

▶ 1:58:48 Ryan Williams: In terms of the cherry sheet. Boy that Charter tuition reimbursement jumps out at me. It looks like it's going up 50% every year. Right goes from 264 to 362 to 4. I'm talking hundreds of thousands of dollars. 264 K 362k 452 k697k then it kind of go barely moves in 22 to 705. But then the projection for 2023 is 948,000. And that's a growth of 34% I'm going to throw a little bit of a loaded question out and you can tell me I'm wrong. Is this investment in the schools causing people to flee to Charter Schools? And are we paying for it by having almost a million dollars into Charter tuition reimbursement hitting our budget.

▶ 1:59:37 Speaker 3: I'm not sure if I can actually answer that question and that in those but those parameters I will say this I will say this though because I think it needs to be said and you look on the cherish and the first part you'll see the child or tuition reimbursement. Number that's an item number four and just again my understanding is that used to be a five that used to be a five-year spread where they would provide us. Certain percentages. I'll say for this discussion 20% and then other you know, they would want wind down to the point where after five years you own the full cost of that student. But they would give us reimbursement in the in the early years, which I think it's gone back to three years. If I'm correct instead of five that they would give you funding towards that effort. But the end of the day you're going to own that still now after three years or so. the concern and then you look at the assessment itself, which is quite interesting because what I find that is more probably the most disturbing to me. Is that on a per student basis? We are talking. The number of students that are in our districts compared to what's in the charter school. Why is it that they're at four or five times? They the we receive at least as provided to them revenues per student over and above what they provide the public schools to. And that's distressing to me not because it's the child of school. It's because it's the funding Equity issue to me. And if in fact they gave us that type of equalized revenue for those students that go to our schools the public schools. It'd be a different funding story. We would be talking about now as we talk about school operating budget and the like But it's just disappointing to see that even if the numbers students are not really increasing to any you know, 200 300 to 400 charter school, but basically where we're at with the 200 plus number that they type of assessment continues to escalate and it doesn't require. The charter school representatives to come before this board as the volkschool does every year and asked to speak to that assessment. That's another disturbing aspect. We have no control on that sense. It's here's your assessment and I allow you that that's not the same as the mbga assessment. It's two different things. I can see. It's getting an MBTA assessment without having them sitting here but a Charter School's quite different that directly impacts the Imperial student number that we get for our students here. So that's where my My thoughts are on that but it's an excellent question. I wish there was a better way to fund it. They've talked about reforming the funding year after year. Of that changing the formula. I haven't seen it. I would love to see that. And again, it just comes down for me. As a matter of equity our students should get at least what they giving person for Charter

▶ 2:02:42 Ryan Williams: School period and that's the legislature that would enact that reform. That's correct. At the beginning of their session now, so it'd be a good time to not agree

▶ 2:02:49 Speaker 3: more. I can show you what not. The only Community voice in this concern is just impacts. So so heavily

▶ 2:02:55 Ryan Williams: Sure. Well, thank you as someone who is. Learning as much as I can about school finance and the very complicated web of state laws and regulations that govern and I appreciate that explanation.

▶ 2:03:08 Speaker 3: You're welcome.

▶ 2:03:14 Shawn M. MacMaster: Counselor McMaster, thank you. Madam. Chair Mr. Another Russo. Yes, your memo dated January 26th on page two. Where you reference? The free cash supplemental funding that will be needed. Yes, the special education stabilization account right now. The balance is 502,000. Is there a plan to draw upon that where you're looking straight or will you be looking strictly to free cash for special ed. And then the second part of that question is where we in terms of the circuit breaker from the state to defray special ed costs.

▶ 2:03:48 Speaker 3: I can I'll be happy to address the first question the second question. I don't have that information this evening. But the question is is correct. We would be looking in this sense. We'd be looking to take whatever appropriation is. Probably 2.5 million now is when I'm hearing from free cash for the school department, that would not come from these special ed stabilization fund. And the reason is that that fund is designed for the mid-year. Um, you know, exceptional circumstances so for student if they all of a sudden a student comes in mid-year or somewhere thereabouts, and we when they need funding that's what that's for. It's not for providing ongoing, you know, annual Appropriations to the regular budget. That's not the point. So the 2.5 is is different in that sense. And the other 500,000 is there is a safeguard God God forbids that we need that between now and the first to July.

▶ 2:04:48 Paul Brodeur: again on the On the Nature's circuit breaker, I could say this that at MMA Governor Healy announced a commitment to full funding of special education circuit breaker that does not mean on people are a doll for dollar reimbursement. It's at a certain high cost trigger point you get a 75% reimbursement the trick with that particularly given that we're expecting to see a spike intuitions based on a fee adjustment. The circuit breaker is a reimbursement model. So you have to have the money up front to pay for the services then you get it back. the next year there was talk from a short budget stability perspective of creating what they sometimes call a pothole account to create some resource for fy24 so that if those OSD rate increases turn out to be what the energy proposal is. There'll be essentially temporary dollars to bridge that Gap till circuit breaker catches up.

▶ 2:05:57 Shawn M. MacMaster: Thank you and Consular Karma chadie asked about the transportation cost which is same question. I had and I'm glad she asked it so you reference special education and transportation. Is the transportation as it as it relates to what you'll be coming before the console to look for in terms of an allocation. Does that relate solely to special ed or there any transportation costs unrelated to special ed whether it's McKinney ventil homelessness assistance act or some other obligation that we have. I'm just wondering

▶ 2:06:32 Paul Brodeur: we McKinney vento Yes again, that is something that that the governor dressed McKinney vento for those you don't know is a federal law that deals with transportation of homeless or displaced youth meaning those most typically a student that is displaced from his or her home district has an opportunity to go to school in the district wherever they are temporarily housed or to be transported back to their home district there is essentially a 50/50 split on that that the the government's 50 has been showing up again in terms of full funding this commitment there because all these commitments depend on Making it through the entire legislative process.

▶ 2:07:25 Shawn M. MacMaster: Okay, so it's not just special ed related

▶ 2:07:27 Paul Brodeur: there no certainly and as you get out west as regional transportation for regional districts, I don't know about Athletics and transportation, obviously, we do some of that. I'm not

▶ 2:07:41 Shawn M. MacMaster: sure what the impacts are there. Okay. That's helpful. Thank you. I think in addition to what car Council Karma JD asked in terms of breaking down the transportation cost that would help to know, you know, what is devoted to what actual percentage just when you do come before us right looking for inappropriation. Thank you. Thank you.

▶ 2:08:02 Speaker 4: Hey the first time.

▶ 2:08:07 Speaker 4: councilor karmjady and then president Grigoraitis

▶ 2:08:10 Manjula Karamcheti: Okay, so the charter tuition reimbursement. I'm thank you Council Williams for bringing it up and reminding me that I had questions about that in December as well. And I'm not sure you're the right body to direct my question to but I'll give it a shot and if it's someone else that'll be good to know. I'm interested in what our commitment is to the Charter School Mystic Valley in particular in terms of Is there ever or what how might we should we want to consider dissolving that relationship? And I'm just curious about it if we are.

▶ 2:09:00 Manjula Karamcheti: Losing for people dollars we have an issue in terms of our school budget. Personally, I have a lot of concerns about the charter school. My kids went there and how they treat special education students and students of color. I have a lot of concerns about anyway, so I'm just curious. What obligations do we have and how might we get out of them? What would that process look like? I am curious we can't

▶ 2:09:30 Speaker 5: ever.

▶ 2:09:31 Paul Brodeur: No without legislative action. We can't it's not like there's a process to withdraw from Northeast Regional folk. That's kind of built into the compact that it's not

▶ 2:09:40 Manjula Karamcheti: something that happened. We just have to remain ascending Community for Mystic Valley forever.

▶ 2:09:45 Paul Brodeur: It's essentially roughly a quota driven Sending District models. So there are certain amount of seats set aside for each. Sending District member and then there's some variation to that. If for some reason, you know, Wakefield doesn't doesn't take all Its Spots. Then those would be redistributed to the to the other communities. But until we hit that until we fill our quote we have no control over. Anything we if we if we chose not to send money to the charges come off the cherry sheet. One more time. I'm sorry. We can't withhold the money it'd be like, you know, we get assessed to the MBTA and everyone's awhile. Someone will say I'll say politely I don't care for the tea and I think we should withhold that money. We can't they just won't it

▶ 2:10:41 Manjula Karamcheti: is based on if families in Melrose choose to apply. Then you know there was a certain number of spots allowed into Melrose, but if we don't have families that choose to go there. We don't obviously don't have to pay per people correct for those.

▶ 2:11:02 Speaker 5: students, right

▶ 2:11:06 Paul Brodeur: Why because I don't get any there's no. even a contrast with the with know these Regional Vocational again in that we don't have a heck of a lot of control over the votes budget But they do at least come and present it and ask questions and then there's a kind of a very circuitous way that that budget can be kind of held up. The charter schools didn't do any of that. There's no it, you know, it's run by a board and they do have some kind of public meetings that I think are posted. I don't know if they're televised but there's no Melrose school committee city government input on to how dollars spent what the curriculum is. Right, right.

▶ 2:11:51 Manjula Karamcheti: Do we have and this might be a school department question any data around? Students who enroll at Mystic Valley and then return to the Melrose Public Schools. I'd be interested in seeing sort of when those students return. Is it after October 1st? What? Yeah when the funding goes to Mystic Valley and then the people dollars don't come back into our city. I just

▶ 2:12:20 Speaker 7: be interested. I think there's more than one. It's not just October 1st. Yeah, there's October 1st

▶ 2:12:25 Paul Brodeur: in March 1st, but some of that is out there because I don't know if it's tracks. I don't think we track like performance impact though. They came back and they did X Y and Z, but there's certainly

▶ 2:12:40 Speaker 7: Census Data if your students sent to state of for all the sending

▶ 2:12:46 Manjula Karamcheti: so really it's more we we can't get out of it. So it's more about ensuring families that they can get what they need in Melrose and not having to go out.

▶ 2:12:57 Speaker 5: Okay. Thank you so much. And again, I apologize if you were the right group, but I appreciate it.

▶ 2:13:03 Speaker 4: President Grigoraitis. Thank you madam chair.

▶ 2:13:05 Jen Grigoraitis: I just wanted to follow up on the question that councilor McMaster raised about the special ed stabilization fund. So I know Mr. Delaroso. You said that's really designed to be used mid-year for unanticipated costs. I don't totally feel like the data of how we've actually used that bears that out. It's It's tricky to search an iqm too, but I can see that in May of 2020. We approved 450,000 to come out of that account in May of 21. We approved 532,000 to come out of that account in one of those years. We also put money back in it. So I I got are you raising

▶ 2:13:43 Speaker 3: your hand if I was just trying to as an example that at any point during the fiscal year if you needed that money you could have you could have access to it to take care of that. Look at it even May. And that's telling that's good to know that even that could happen even then but you do you have that money there to to use it. I know there was at least 20 that we didn't use it at all but there were years that we had to use it. So it's great to have it there. But I just specifically meant anytime during a fiscal year that after the budget is set that you need to access special ed because someone comes into the district anticipated or unexpected that kind of the things when I was saying sorry. I apologize if

▶ 2:14:27 Jen Grigoraitis: I missed I misunderstood I just know I just wanted to clarify because it feels like we are. Into the fiscal year, we know we have a shortfall in Special Ed. But we're there's not we're not looking to pull money

▶ 2:14:38 Speaker 3: from that account at this point. We're looking to use the free cash

▶ 2:14:40 Jen Grigoraitis: and we're also not looking to use arpa funds to close. Yeah, okay. And then I guess just a bigger question is obviously some of this starts to feel familiar. I know pre passage of the override this body typically put about 750,000 a year in free cash into the schools for structural deficit. Now that number is at 2.5 million. Obviously, I'm assuming that the fy23 budget for the schools was built on the same. Historical accounting practice or whatever the term is that we're using that the fy22 budget was built on do we see that being a problem going into fy24? Like are we now looking at? Rather than structural deficit of 750,000. It's

▶ 2:15:26 Speaker 3: 2.5 million. That's the next one question the expectations that we don't want to do that. We don't want to do that. But we do want to do is recognize that the Deficit that position we're right now should not be repeated. So frequent to 24 we end up at any time during the year in a situation a 2.5 million a free cash or any of the fun because we're trying to fill the same hole. We've done something wrong. So we have to look at a number of items to make sure that doesn't happen that's going to be an increased emphasis on the school department for my perspective. God bless you. Thanks my perspective that the budget reflects and understanding that the those two categories need to be really considered heavily this year for funding for fy24. In addition to that the city also has to come to the terms that we have to provide in budget that will give these school department additional resources to address these particular areas in specifically so that together with dense spending to their efforts there out ourselves here and instead of adding I'll say staff with that perhaps we shouldn't add in particularly in 24. We should look at closing this Gap. It's aggressively as we can and not look to making it any bigger than it needs to be but it's gonna take at least one. If not to and maybe a little bit more number is to address it depending upon a lot of factors. We don't know yet. We don't know the student opportunity actor. We still don't know what the expectation is going to be. For special ed in upcoming years and maybe actually change in methods of protocol. I don't know but we can't lose sight of it. We don't want to repeat those mistakes of the past with the 750,000 a year until the override commitment exactly as you indicated, but it should never stand still and that's probably the error of the past with that 750 Stood Still for too long. You don't want that to happen. So I don't care what the number happens to be right now, but we can't let it be a year after year event. We don't take action and bring that down then we're not doing our job. That's how I feel.

▶ 2:17:38 Speaker 2: Thank you for that. I appreciate it. Thank you madam chair.

▶ 2:17:42 Speaker 3: councilor bremski along the lines of Council of comanchetti's idea of looking at the transportation costs in different areas. Would it also be possible special education costs and terms of programming areas and see if we're sending the same children out for the same program. And maybe develop the programs within the school department. Is that something that they is that something that they would be able to give you? in in a budget format programmatic costs specific I'd like to see that and I think that's an opportunity there that we need to look at. My perspective absolutely, I agree with you. Thank you.

▶ 2:18:33 Paul Brodeur: It certainly going to be as you might imagine a during the superintendent search Project. process that is going to be one of the both I think desire the members of the committee, but also the data we saw from the surveys more folks are looking for those things aren't always super helpful, but there was clear emphasis on financial management and special education.

▶ 2:18:59 Speaker 3: Right. Thank you.

▶ 2:19:02 Speaker 4: Any other questions?

▶ 2:19:06 Speaker 4: I have a few of my own.

▶ 2:19:10 Leila Migliorelli: It just one thing while we're talking. I was looking at the memo you provided today about. The overall status of things. I remember at one point. We're talking about a fee study looking at a the city fee study. Is that something that's still in progress

▶ 2:19:26 Paul Brodeur: or ongoing? It's a fairly when you start to think honestly all the things that we Do charge for and trying to shakeel's essentially every Department? Responsible for its own kind of traunch of fees. So in city clerk as it's it's peace. building department has its peace convict a couple of Health Department pieces want to see what we're charges who were taking in and try to get some reasonable comps from other communities to see to see where at that is. I mean that is something that quite frankly should routinely happen. Not just oh my God. time to look for some money, but that needs to be a little bit more

▶ 2:20:08 Speaker 7: of a consistent review to make sure we're charging

▶ 2:20:11 Paul Brodeur: correct fees Meeting those expenses and Generatingly proper amount of money to tax up the activities those are intended to support.

▶ 2:20:21 Speaker 4: Thank you. Um

▶ 2:20:23 Leila Migliorelli: I guess just a question about the school budget and just a point of clarification Mr. Deller. So if we're talking you're talking about closing the budget gaps, you've got the 2.5 million did I hear you correctly that? A recommendation would be to then not look at hiring not go beyond what the school already has. So if there's new positions those things would be sort of off the table. What would be often on the table in terms of trying to do that? I know you said it in our last meeting too that the goal would be to you know, draw down the deficit increase the base over time. Can you be a little bit more specific about what that would look like?

▶ 2:20:59 Speaker 3: concern if in fact the stress in your budget is special ed in transportation. you don't fund it properly you underfunded intentionally. And knowing that it would not be adequate. It behooves me how you can justify adding additional staff at that time. If you haven't funded essential services and cost. That's what I mean by that.

▶ 2:21:29 Speaker 4: and

▶ 2:21:31 Leila Migliorelli: the conversation that sort of connects to what counselor that's current shady and bremski said about reevaluating things is that an ask from the mayor to the schools who take a look at? You know, I get that we're in the middle of a superintendent search, but how How does that directive come about that we need to take a look at? Transportation special ed. How do we reduce costs or bring something in-house? How does that process start?

▶ 2:22:01 Paul Brodeur: Well part it was you know, it was informed by our experience in 22 with with the underfundance that nebas. As a general proposition was somewhat obvious and then we had to do the the data mining or what have you to see. With much more specificity, where are the holes? What drove them etc, etc, etc. I know it is not a like an order from on high. I want to say I mean that is the the challenge for the district will always be it's not a will do this and then we're done the evolving nature of the needs of special ed. And what have we seen in the in the past couple of years. So I think covid both scene increase meant to help impacts between all the school isn't a provider but that's certainly impacts the learning environment for the child in the classroom also seen dramatic increases in Autism diagnoses the question or Spectrum diagnoses question being whether or not there are more incidences or better Diagnostics, but always trying to keep up with that. We certainly see what one thing that probably generation ago wasn't a big. Issue in terms of districts trying to figure it out. It's dyslexia and had it and how to deal with that. So you've always got to be thinking about that and you always have to be thinking about the right. How do you draw the line? Where do you get the kind of the economy of scale where there are some kids we all know we can't serve that happen to live here that we're not going to serve in the district environment and we have a legal and moral obligation to take care of those kids. And those kids are going to go out and they're going to be very expensive and that's the way it is the challenge becomes. You know, where is the best programming? What are the best and honestly That is not something I can figure out. I wish I could but that is something we do have to lean on. The staff and have some confidence particularly at the senior level that they a understand what's going on in the district and the particular needs of the district. But also what are the trends out there? What does work? You know, what what programs might be You know more economical but still provide good service outside the district. Are we getting everything we should from seam and what kinds of things can we bring in either? You know with with direct access to Personnel on a kind of a one-off or very specific to an individual child's IEP versus what if we see a you know, a critical mass of dyslexia diagnoses. When is the Tipping Point where it's better for us to bring that in-house as opposed to? Send it out. I think it was a very hard thing. But that is the ongoing mission of the district and really every district is that is to figure that out.

▶ 2:25:04 Leila Migliorelli: So it's a you know, sort of mix of a program evaluation but taking Financial circumstances into account. Okay, so programs being one part of the school budget, obviously the largest part of the school budget in the city's budget as was pointed out earlier our salaries and Personnel just wanted to provide an opportunity given that there has been so much discussion in the cotton the community regarding the teacher contract that was settled on and you know the agreement that's happened. Do we have are there concerns on the city budget side or within the school budget about the fact that we have? I believe we had an offer. We have gone above we had gone above that offer agreed on that is are there any concerns about the impact of that on that going above on the city budget or the school budget? Yes.

▶ 2:25:57 Paul Brodeur: I mean there are always concerns about Yeah, you know meeting any of my financial obligations in the in the context of our responsibility for all the other things we have to do.

▶ 2:26:09 Leila Migliorelli: Okay more specifically. What do we know what that looks like that like, do you know or is the is that something that the city will feel an impact on or will that be the school impact in terms of that? Whatever I'm not remember anything. We

▶ 2:26:27 Paul Brodeur: flip it. It's a little bit of a of a wheel see the biggest X Factor right now is the student Opportunity Act. So if the student Opportunity Act doesn't in doesn't come in robustly, we will have some very very serious challenges sooner than we would like to confront them.

▶ 2:26:46 Leila Migliorelli: student opportunity accuracy, that's a Lack of a better term something you can't count on so it's sort of a discretionary type funding. Are you saying in this year or the next you know, the three years of the contract? That's something that we're going to have to look at. Is there a goal I would think Mr. Della Russo It would be your preference to look at money that is not reliable as something to do extra with and not count on we don't want to be planning that we're going to get, you know, relying on state funding for something that we don't know where it's going. I'm just trying to get a sense to understand that I guess and that's the answer to the question that we are counting on some type of state aid to help bridge this gap which we may or may not get and also

▶ 2:27:32 Paul Brodeur: says it's not I don't know make it sound like it's a like a casino proposition. We do that to a certain degree with everything state aid. is to a certain degree predictable it is it is reasonable to assume you're still what we're hearing that there will be some growth and we will certainly see level funding and I think significantly more on that informed. Certainly my decisions about the money piece. Of the contract, but it is not it is not without. The number of probably you know fairly obvious challenges anything that grows. Bigger than two and a half percent.

▶ 2:28:17 Speaker 7: presents challenges and choices

▶ 2:28:27 Leila Migliorelli: and then I just want to address on thank you Mr. Delarosa for sending that very detailed response to my question about on December 9th regarding the discrepancy between the two budgets. I think. We don't have to get into all of that. We can read the memo and I think that's food for thought moving forward. We really I would like to see us get to a spot where we feel comfortable on the counselor. I'll just speak for myself personally. Where the information we're seeing matches, you know, even if you're looking in the December report the munis report about what's been spent here, you know year to date you look at the school line item and it says zero that obviously I know is not true. I'm just thinking for the Public Public facing documents. We just having multiple documents out there is not ideal. So if there is a way I hope that you know, your office can work with the school's office to make sure that it's the same information that we're getting the same information that it ties out. It makes it easier for us to talk to the community and and kind of convey that confidence that the data is all the same. Absolutely. I

▶ 2:29:36 Speaker 3: couldn't agree more and this would be the perfect time to do it.

▶ 2:29:42 Speaker 4: Thank you. Thank you any other questions?

▶ 2:29:46 Mark Garipay: counselor garepe mine's more of a statement I guess with regards to The school department in the 200 2.5 million that they're going to be looking. I don't. I'm hoping that they don't have to be told from the administration to try to find efficiencies and save money. I'm hopefully they're working towards that and have been doing that since this this budget so I know. I know. there's some Direction but hopefully they are continuing to work in order to come up with a number that makes sense. And hopefully they can tell us the 2.5 and give us a lot of backup on that but hopefully they've been working towards somehow saving money throughout their whole budget since this came came about and I think it's their responsibility. I don't think they I mean that yeah, the mayor should be telling them but they really should be working towards that since it actually happened. So that's more of a statement.

▶ 2:30:54 Speaker 4: What is the will of the committee?

▶ 2:30:57 Speaker 3: Not sure like to make a motion to places on fire dragon.

▶ 2:31:01 Leila Migliorelli: Motion do a place on file made by counselor Stewart seconded by counselor. Sonella all in favor. Hi, I

▶ 2:31:08 Speaker 4: opposed

▶ 2:31:10 Leila Migliorelli: Okay, I don't know if counselors have questions. I'm just going to say right now. We have got the info order on arpa. on discussion or all entertain a motion on discussion