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

Transcript (~2 h 2 min @ 1:59:10)

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▶ 1:59:10 Speaker 6: Okay, next up.

▶ 1:59:14 Jen Grigoraitis: we have unless there is a motion Teresa social recess

▶ 1:59:17 Ryan Williams: for three minutes

▶ 1:59:20 Jen Grigoraitis: even motion Teressa Bay counselor William seconded by Vice chairman. Bigley rally for three minutes all in favor. I okay. We will recess until 9:03.

▶ 2:05:04 Jen Grigoraitis: He'll be back. So and we're back moving right along. This is info 2023-11 update on the status of the city of melrose's finances. And before I turned it over to our guests, I'll just ask if any of the co-sponsors of anything they want to say. Don't okay. So joining us tonight. We have assessor Sarah mccollins CFO Patrick delarusso and Treasurer, Catherine Armada. Thank you for being here.

▶ 2:05:34 Speaker 4: The floor is yours. Thank you to the chair. And thank you. Everyone Below on us to be here this evening expectations. This is going to be one just the beginning of a larger conversation. We have to have as a community based on what we all know to be true. And collectively I have the fullest confidence as I mentioned last time that we will absolutely get through this in a way that everyone would feel is reasonable and measured. As well as balanced. So to get right into it. Again to my my left is my fantastic treasure collector Catherine. And my wonderful cheap assessor Sarah please to be here and again the life to get right into it. If we could we're gonna cover some topics tonight. I would ask respectfully. If you could hold your questions to the end. If in fact though, you want to jump in then please don't hesitate. But we do a bit of a lot of material in a sense and I do want to get through it in such a way that at least you can make a couple of notes as we go along. We are going to give you a little snapshot of the budget the actual impact the proposition two and a half new growth and free cash. impact of school department deficit the tax levy limit the capital needs and the debt model.

▶ 2:07:01 Speaker 4: On the screen you'll see some terms the tax levy. Which is the revenue of community can raise the wheel and personal property taxes. Proposition two and a half who is a Massachusetts law enacted in 1980 that place is strict limits on the amount of property tax revenue of community can raise through real and personal property taxes. The tax level limit the maximum amount of communities allowed to raise through property taxes in a given year based on 2.5% growth of the prior years Levy limit plus New Growth, which we'll talk about moving forward. In New Growth again is the increased value of new development and other growth in the tax base that is not the result of evaluation. A portion of this value is applied to the levy limit. and override a permanent increase in the levy limit of a community above the allowable 2.5% growth and again why the communities Embrace overrides because it provides a stable recurring Revenue that allows you to make permanent commitments to staff and the like that otherwise you could not make And free cash fund certified annually by the state that come from Municipal revenues being greater than expected. And/or expenses being less than budgeted. Course, there's a lot of caveats to that but in general that's the bulk of it. This is a snapshot of the budget for 22 again the year that we know we closed. And just for information or purposes after the school department, which is our biggest department budget the next highest or insurance and benefits at 24% and dpwm police each at 11% of our total City budget.

▶ 2:09:00 Speaker 4: next slide School spending includes cross-care within City budgets when you include the portion of the DPW budget that covered school facilities, which had been talked about recently. And the portion of the insurance and benefits which is health insurance Medicare. Non-teacher pensions that pays for School employee benefits both of the woodchair account for outside of the school department budget the amount. We actually spend to run our schools and fy22 was 60% of the total City budget.

▶ 2:09:40 Speaker 4: How does proposition two and a half affect our finances? Well, as I mentioned earlier, it places strict limits on the amount of property tax revenue Community can raise through real and personal property taxes. So how does this affect our budgets? In the past few years real estate values and morals have skyrocketed. So why a finance is so tight? The answer lies in the way proposition two and a half works. Each year, the total amount of property taxes. We can collect the call the tax levy it's capped at the previous year's number plus a two and a half percent increase plus the tax of net value on any new development called new growth. Melrose already tacked to the maximum. We are allowed by law. This means that we cannot grow our tax Libby beyond our Levy limit without an override. So all the annual operating budget increases must fit within that limit. Many of the increases are non-discretionate discretionatory and beyond our control again the ones we talk about the most are health insurance in Medicare. Which are expected to grow? by 746,000 next fiscal year fy24 that means that every other possible increase including inflationary costs of goods and services. Must be fitted into our budget around those big ticket items that we must pay for.

▶ 2:11:15 Speaker 4: New Growth comparison to Wakefield To give you some local perspective. Here is Melrose compared to Wakefield. The amount of New Growth added to our tax Libby has been relatively stable in averaged about 600k every year as compared to Wakefield that has had more than 1.3 million a year. This year new growth was unusually high. The increase is mainly the result of one utility company eversource finishing construction on installation of the underground conduit and conductors and Reporting it in this year. Commercial value in Wakefield is more than double. What we have in Melrose 11% CIP versus 5% in Wakefield also shifts the full 1.75% on the commercial tax rate. This information by the way could all be found on the Department of Revenue. website division of local services New Growth for Melrose news represents less than 1% of our total budget. And on a regular basis that is not going to change. We do not have the capacity to for new development to the extent that were that material all to that number. Just based on a demographics alone.

▶ 2:12:47 Speaker 4: This is a ten Community, New Growth comparison. This child shows Melrose in red again in Wakefield light blue. Compared to 10 other cities and towns in our region that we Benchmark ourselves to for the age for HR purposes. Not only our numbers usually much lower than our neighbors. You can tell that new growth can vary a lot from year to year. And some are literally off the charts including Salem in 2020 in North End over in 2023, 5.9 million and 6.8 million. Those are significant numbers. There was no way to predict but New Growth numbers will be in future years. It depends on construction activity in the community, which is largely dependent on economic conditions in his therefore very difficult to predict from a year to year.

▶ 2:13:48 Speaker 4: Melrose free cash the past five years this slide shows our free cash history and how we have used our free cash over the past five years. Having free cash is expected in routine. And there are many valid reasons why you municipality will generate it. The annual budget approved by the city council each year is a good faith estimate of revenues and expenses, but it is never exact. Free cash of the fund certified annually by the state the complementable revenue is being greater than expected indoor expenses being less than budgeted. people sometimes ask what does the city use free cash for and could we use it to fund things like additional salaries? The shorter answer is no particularly not on a recurring basis. Because the amount the free cash each year is unpredictable. It is responsible practice only to use free cash to fund one time non-recurring expenses to avoid creating a structural deficit. By basing our operating budget on funds that might not be available in the future. So the answer is yes, you can use free cash to fund those. Salaries however, as it's not practical over the long term because those are not guaranteed free cash varies year to year and you don't want to base permanent expenditures on potentially revenues that will not materialize the year after base your budget on that. That's not a good way to go. However Times it's required for short periods of time.

▶ 2:15:37 Speaker 4: You'll see that in the year before the override. We mainly use free cash for operational expenses. However in the past four years we have been able to put away savings to help us where the future economic downturns. It have been able to fund many necessary projects to preserve the fabric of the city using free cash. Both of which are critical to melrose's fiscal stability. Free cash for Melrose was last certified in January 2021 and we do not yet have fy23 free cash number from the Department of Revenue certified.

▶ 2:16:16 Speaker 4: again free cash compared to our neighbor Wakefield another question though. We sometimes get Does moles have too much for cash? Again to give a little perspective on free cash here was Melrose compared to Wakefield. And again, one of the things that stands out is we're typically in the fortify percent plus a little bit depending on the time frame. We don't see those large deviations. Because we of our chandelier our demographics. We have bedroom community and we also budget very conservative to allow free cash, but you're not going to see those lives spikes, you know, the 10 million 15 million. It's not going to happen here. That's not how we budget number one.

▶ 2:17:07 Speaker 4: The next thing is a five year free cash comparison. We are in red. And you can also see that compared to a benchmark communities Melrose generates fairly modest amounts of free cash. Typically food cash is the only Avenue you have during the year to fund unexpected or unanticipated expenses including snow and ice that can deficit and without free cash. We have really limited options and how you can pay expenses that arise during the year whether it's a school or the city.

▶ 2:17:43 Speaker 4: a free year comparison actually in percentages current Massachusetts Department of Revenue guidelines recommends as a best practice that communities have a free cash balance of five to seven percent of the operating budget now. Why is that? Why is that the Department of Revenue division of local Services doesn't want to see Community struggling to meet their budgets. They want them to have some capacity to address costs and they do not want them to go to the state and say listen. We have a funding issue here. We need some support. We need some help. We need some Aid that's what they don't want. So they encourage us to be conservative if benefits our community and it benefits them as well. As you can see from this chart in Melrose. Our percentage has varied. I'm just over 2% to just under 6% and some of our Benchmark communities have much higher percentages.

▶ 2:18:41 Speaker 4: fy22 school department deficit

▶ 2:18:47 Speaker 4: I want to turn to the impact of the school department deficit. According to our Consultants at CLA the major cost overrun drivers and FY 22. We're from the special education tuition and transportation cost. As well as the cost of coverage for covid-19 related absences. This year we were able to close this deficit by using federal education relief funds. As well as Opera of 1.7 million in total.

▶ 2:19:21 Speaker 4: The school department structural deficit is expected to continue. We do not anticipate. That it will not continue. We do anticipate that they will continue to be a structural deficit as we have had in the past prior to the override.

▶ 2:19:43 Speaker 4: for several fiscal years and we could talk about that a little bit further at the conclusion here trade-offs must be expected in order to meet the needs of the schools and continue to run all City departments that residents rely upon as well as continue to fund necessary capital projects. We look we will look for both potential funding sources including free cash. in stabilization funds as well as ways to increase our Revenue. to meet this ongoing need it is also important to note that new developments and Redevelopment in the city support our new growth and that the Redevelopment of distressed properties such as the Caruso building will ultimately show up as new growth on our tax rolls.

▶ 2:20:38 Speaker 4: net State a you might think that state aid. Would make more of a difference to helping us balance our budgets and especially paying for our schools, unfortunately. State aid has not kept up with the increase in cost. In fact, netstate a decrease between fy20 and 22. 18,000 Less in that state aid than the previous year. Chapter 70 school aid increased only 117,420 dollars from FY 21. Well the same time the charter school assessment payments increased $449,000. a 13.2% increase from FY 21

▶ 2:21:33 Speaker 4: and fy23 on Nate net State a group due to the student Opportunity Act and we are going to see if this trend continues and I do want to take a two second break here because a couple of points of need to be noted here first and foremost is that We have where did the storm which should provide confidence to the community? Number of times when we've seen drastic reductions in state a what does that mean? Well the last downturn in the economy that was we really were hit with was between fiscal 9 and 10 We lost one million 930,000 152 dollars in one year. This gets better. The next year who lost 515,940 more that was FY 11 now, hold on. We're not done. the very next year we lost 553,000,782 dollars. a teal under three million dollars we lost and stayed aid over three year period because the economic downturn that's what bothers me. Not only that if you just turn the page a little bit ahead. Look what happened between fy20 and FY 21. We lost 317,205 in next state eight. On top of that right after that between 21 and 22. We lost 218,000 912 dollars. So between 20 and 22 collectively we lost 536,000 117 dollars and state a but yet. We required to find out operating budget. Really? It's very interesting.

▶ 2:23:41 Speaker 4: so it happened and the reason it's so critical to what we're going to be talking about with the school deficit. Is that we went through a host which we can discuss in another meeting a host of activities everything from FYI 11 to FY 16. Where the last override the original over I did not pass which was happily override cost 2.5 million the one that did pass. So the structural deficit that we're talking about now is half of the override that was approved by the community in 2020. Just I anticipate that the structural deficit will be approximately 2.5 million hopeless less. For fiscal year 23 which has to be addressed prior to closing fiscal 23. however again we have collectively positioned ourselves that We have the wherewithal. To embrace this this challenge. It's going to be multiple years. and bring the school department particularly with special ed. and transportation as priorities such that they'll have the funding necessary to meet those needs. It won't be the short term. Because these this the trend the ship and that direction overnight, we do not have the capacity overnight to do that without an override. However their measures we can take now and before we now in July 1st that will help and assist us. And those will come to light more as we continue to work through it. But just the backstory was that we've been through some significant difficult times. We did not lay anyone off of those times candidly. We had a complete wage raise. We had five years of 1% callers. And I mean away trees. I mean across the entire city in school. So the measures taken that the necessary. To keep the engine going the staff working and continue to keep the Integrity of the community at its peak for what we had to work with. And again, that was State a that we had no control over nothing we could have done about that nothing. So this should be the graph and they dumb doe again this graph from the state department of Elementary and secondary education shows the growth in the cost of running our school system for the past 30 years. The light blue is what we are required to spend on our schools. What's known as the foundation budget. That's our spending floor. The Orange is the state aid. We received through Chapter 70 funds which have remain essentially flat. for the past 10 years the dark blue line is what we actually spent. As this chart makes clear with every passing year the city must fund a greater and greater portion of the school's budget to make up the difference. I don't see that changing.

▶ 2:27:01 Speaker 4: Looks like we continue to tax again. At the maximum. What does that mean? Because of our ability to raise taxes again is limited by proposition two and a half. There isn't is little to no capacity. To increase operating budgets beyond the current levels to meet this ever-growing pressure. As you know every year we calculate the amount of taxes. We are legally allowed to raise. Based on the year before we had 2.5% to the last year's Levy limit plus any new growth. The difference between our Levy limit what we could raise in our Levy what we did raise is called excess tax. Let me capacity. And the one that's in the block. It just shows you what because of technical reasons. You couldn't raise that. For example, the 765 all is the 1911 because of half of a penny or on a particular rate which you know due to rounding that's what it comes out to for the community as a whole but it's not the for lack of effort that we didn't try to raise it. Um, and again we have no we have no excess Levy capacity. Really and basically a 21 for example, we had 765 dollars excess lesson Levy capacity. This year which was 22 we had about 25,000 excess Levy capacity. These numbers are just a function of rounding because we can't legally tax a portion of a dollar.

▶ 2:28:37 Speaker 4: Moving on if I could in Melrose 92% of taxes are paid by residential property owners. And as you know from the tax classification hearing you just your head earlier this week. We also shift some of the taxes on to our commercial and Industrial taxpays. But due to the composition of our city, which is over 95% of residential and without numerous large commercial properties. The net effect is that 92% of tax dollars paid by the residential property only. And again, it's this next shot shows. As property values arise tax rates fall as that inverse relationship. Many people look at the assessed value of their home and wonder why the city doesn't have more money to spend given how much values have increased recently. Remember each year. The total amount of property taxes. We can collect is capped. At the previous year's maximum Levy plus a two and a half percent increase Plus. the tax, New Growth Because that number is fixed if property values go up the tax rate must go down. That is exactly what has been happening for the past five years residential property barriers have been rising and the tax rate has been dropping with the exception of the year the city passed and override which added to the tax level in FY 2020. This means that although property values have gone up significantly that increase in value is not reflected in the city budget. The only way to change this is through and override.

▶ 2:30:24 Speaker 4: Looking ahead to fy24. We anticipate approximately 2.3 million in additional tax revenue. This year's lab tax limit was just over 72 million 2.5% of that is 1.8 million. As noted earlier New Growth will be unusually high. Fy23 due to eversource finishing construction and installation of underground conduits in the city, but for fy24, we will estimate based on historical Trends. Again, this is because New Growth is unpredictable and we have to build the budget responsibly. So we are estimating 500,000 in New Growth. To give you an idea of how that 2.3 million take us. We remember again that our health insurance in Medicare line items alone are expected to go by 746,000 next year.

▶ 2:31:25 Speaker 4: Capital needs fy24 to 28 Capital planning process has just kicked off a department heads. Because we always have to be cognizant of the fact that we have to do capital projects. It's really important. New Capital planning process has just kicked off with our Consultants at the call in center. In addition to helping to build a five year CIP. They will also work closely with my team to develop a reasonable and responsible capital investment strategy to guide us. Our financial plan would take into account the school department structural deficit and work to find ways to meet the most critical of needs using the resources available for Capital Investments. Now, how does that play into the school department structural deficit? Well, this is a reminder if you use the number of a hundred million dollars for our budget for upcoming year. And we use the 5% back to for debt. Every 1% is 1 million dollars. So if we're at, you know 4% for purpose of discussion right now that we're using and we haven't had our 5% cap. There's good reason for that. Maybe we may not want to we may want to allocate that additional million which additional 1% represents to address the school department issues at some point. As an option, so just because you can doesn't mean you do. With given what we know now with that with the deficit for the school department that's going to play a role candidly and the capital project from where I sit. But are at the same time we have to balance that he's always a balancing act because we have to show the rating agencies standing employees. That we have a active and Vibrant Community that makes Capital Investments on annual basis. They want to see that because they double A Plus rating they gave you justifies that and they want to see you continue their process. It doesn't mean we have to do over and above but it does mean we don't solve the program. Means you continue that as we have in the past through any and all but with an extremely measured approach for funding really well thought out really planned out. So that the community can see you haven't abandoned it. But you've taken into account what you must take into account, which is the structural deficit that we have for us. Debt management again, and we try to manage that responsibly. Again, I just talked about the non-exempt debt being a property 5% of the budget. And the child will show you that in fact going forward. We also talked about the public safety buildings, which would have to be a dead exclusion given the nature of the cost included that we're talking about and that it would not be appropriate to try in any way to absorb that within the 5% limit of the city. That's a nonstada. And one of the point quickly the I asked Peter Fraser from Hilltop security. To give me his thought on the because we always talk about the importance of the bond rating. And people say well they just maybe they just talking about that's no it's not just talk. Because in fiscal 2013 a bond rating increase to double A plus the next rating increase is a triple A. A triple A which is the highest you can get he indicated me here that the city because of what we did when we shifted in 2013. We went up from AA minus to an AA Plus. He said the total interest savings on a 45 million dollars of General long-term debt that we issued. Was between one and two million dollars over the tram of the bonds. It is significant in a place of role. So that one shift in your debt rating is huge. And it means a lot when you when and Community like us where every single dollar. Is critical and we don't want it and we don't want to spend more money interest. We absolutely have to and that's always in the back of my mind always has been. That this is where we have to to live. This is why we do what we do. That's what we can't say. Yes to everything because we're not going to be in that position any longer if we allow that to happen. We have to keep the discipline that we've established because it works.

▶ 2:35:58 Speaker 4: And again this chart I think shows the bottom part the darker green that shows the debt that's already been. Permanently borrowed and up top indicates the lighter color the debt that's projected to be that would be your library or your ladder truck get them. We've committed to the road work, but we haven't fully bonded yet and there's so many reasons why we haven't bonded yet because we're not there yet. We're not ready to bond it. But once we do that'll turn the dark green, but we're not there yet. The projects are underway. They're not completed and we're not at that since the this my findings team really wants to come back in January. We want to do a complete mid-year budget review for fy23. Yeah that we're in. God willing will have free cash certified by the Department of Revenue by then. I folding anticipate that to happen. And we'll do an update on local receipts for mid year and discuss a little bit about State funding what may may not be coming down the road. Unfortunately typically and again, this is from my perspective when a new Administration takes over and Governor Etc. We usually don't get a state number probably till March. Typically, we get it in January these some announcement made at the annual meeting by the governor. But this year when it's always seems to be the first year of the new Administration. I'm sure there's a million reasons why but we probably don't get a good sense of what they're going to do for state aid until maybe March. So we have to be a little bit on our toes actually extra on our toes and see if we can you know work with that. But again, I've really really appreciate you taking the time tonight and if there's any questions, I can't get you guys tonight. So I promise I'll get it to you as soon as I can.

▶ 2:37:54 Jen Grigoraitis: counselor gemaldine and then councilor Williams and councilor Stewart

▶ 2:38:01 Maya Jamaleddine: Thank you for the presentation. Thank you for being with us tonight you started by. Your your presentation by saying we're going to get through this absolutely right? So I'm like full confidence. He's coming with the solution. I was so happy then you did the presentation and honestly, and I'm saying as resident and as a consular, it's depressing. What you showed us, it's the present are we? What are we announcing tonight is the city. And how much are we in trouble? Like what you showed us tonight. It's honestly.

▶ 2:38:48 Speaker 5: I don't know.

▶ 2:38:52 Maya Jamaleddine: I'm I'm speechless about this. We we are in a lot a lot of trouble with what you showed us. I wanted to to talk about the special ad I mean if we are showing those numbers and we are giving those information tonight. What are we what the message that we are sending to the parents that their kids are in special ads? Are we telling them to go find? So other resources outside of Melrose, what is it that we're going to provide them with? I mean, this is a big message and I'm not giving speech here. I'm not telling you what you guys need to do. But this is a big reason why we need to pull any resources. I don't care what where to get it from. I don't care about the balance that you mentioned with all that respect. This is critical. This is on us. This is on on every single leader in Melrose that those kids those special ad kids are not getting those resources.

▶ 2:40:15 Maya Jamaleddine: I don't have question. I am so shocked with what I heard today.

▶ 2:40:23 Speaker 4: To the gym AI yes a couple of points. We are not at that point to candidly. We're still making the termination on exactly what the deficit is for 23. Um, and we also looking for changes in the funding of the special education stabilization fund. It's capped at we typically tab Target at a 500,000. Well, we see coming down the road with increases like 14% for special ed. We're going to probably we're going to increase that or ask the council to increase that to probably a million dollars. and the debt fund is not intended not intended to be used as a Plug for a structural deficit that fund just as you indicated is intended to address any special needs concerned at any time during the fiscal year. So if we want to go to that Fund in the reason it was set up. Previously for those that don't know is that when you set the budget for the year for the for the school department and it's predicated on certain costs anticipated costs all of a sudden you have two or three students that come in. Well, where do you go to get those revenues that fund was designed to assist the school department any midi anytime during the year to pay for those special-led costs. So one of these strategies of many that were going to put into place will be to enhance that fund itself. Secondly. As they indicated earlier we will like we did in 22 we will close 100% of the structural deficit for the school for fy23. So the city will provide that two plus million that is necessary to fully fund the school so that no one. It will feel any impact for services period and fiscal 23 as you go forward, which is an excellent question my to 24 to 25 26, there are many strategies that the city can adopt. For example, you would say I would suggest that. We consider. Adding to the base budget of the school department over its a three-year period a certain dollar allocation, which I have a few. ideas in my head now that I've been working with actually that would increase the base budget of the school department over a multi-year period And so doing you can take that deficit bring it down. Many many that's balanced. So you're not corrupting any of the Departments bring their base budget up up and up to so this goes to self outside of an override. The only other alternative would have would have to overnight. Why don't you overnight? You have to an override February 24 period so but we're going to do is we realize that with school needs the funds. We're going to make them whole year after year after year, but whatever mechanism if you indicate we need to do we will do that. So I have confidence. I've done it before. Yeah, I've done in candidly. I was trying to demonstrate earlier. That a three million dollar hit to the state aid over three years is very similar. Very similar and at least there here. We have some control. We're in our control over state aid. So the community should feel extremely confident that we weather the worst of the storms the worst. We've been through the worst of the storms we didn't ever layoffs. Had we no we didn't so we provided service levels. We absolutely did but it's going to take as you indicate a massive Collective effort by everyone, but I don't want anyone to think for a second manage this because I've done this now for over 30 years and we're gonna get right through it periods.

▶ 2:44:25 Maya Jamaleddine: So in truth 2016. Yeah, we that's Wednesday 8 decreased. We lost a lot of money, right it

▶ 2:44:36 Speaker 4: started in 2016 No, it started in from 20 to 21 21 to 22. Okay. We lost over 550,000 those two years way back earlier between 9 and 10. We lost 1.9 million. Then we lost another 500 another 500 plus 3 million dollars then during the time of economic doctor which again impacts every city in town. But because we took the measures we took we got through it.

▶ 2:45:05 Maya Jamaleddine: And we will go through it part of me. We didn't go through it and we did go through

▶ 2:45:09 Speaker 4: it though. Because we did and I could show you what we did we did. Through the chair respectfully he would in FY 10. We joined the group insurance commission. We saved over 1.4 million dollars just in year one in fiscal 10. Remember from 9 to 10. We lost 1.9 million. So in 10 we joined the GIC that saved us 1.4. Next fiscal 2011 we instituted across the board wage reads for all employees City and school to save jobs. We never restore the money back and everyone was able to retain their work and fiscal 11 because they went took a zero percent raise including myself. Across the board everyone Union on Union City Public Safety across the board. What that's not the end of it. We cap the coal increases after that cost of living to one percent for over five years Union and non-union. We enact a special legislation, FY 2011 Which we had the Mount Hood Golf Course pay for all the parks and Fields. That was special legislation to get that done. So wouldn't hit our debt package. Go on to continue to go on. We capped the debt at no more than five percent to non-exempt. We put in an ALS Advanced life support in a basic life support Ambulance Service to pay for the cost of eight full-time firefighters. We did then fiscal 2013. Then we restructed the entire department Public Works to absorb all the school department buildings and in so the school could function on work on educating soon. It's not worried about broken windows and fixing things because that shouldn't have been the initiative. So we did that 2013. We brought in Esco program with people remember that it was 2.4 million dollars and reduced the long-term energy costs of the city. And fight through 2015. We privatized trash and recycling. That's what we did. And I can go on and on but if I was Regional efforts, we did these things because we had to deal with that significant reduction in state aid, but there was done we acted on it. No different than today. We will take actions that will also allow us to manage our finances. We're the managers of the finances. That's what we have to do here. And we're going to do it and plus by law. We have to have a balance budget every year period so

▶ 2:47:48 Maya Jamaleddine: what I'm hearing from you is we are heading to an override.

▶ 2:47:52 Speaker 4: I didn't say that. I said outside of an override. I'm looking at this. It's probably a member of a three years to work into this into. The budget that we need to provide our school with what they need to have but that doesn't happen overnight. It can't when you don't raise that kind of money under the regular two and a half because you can't have to still pay your other departments. You are the unions your other Public Safety, but that takes time but during that time we will work to make sure that the school department has the most resources we can provide there's no guarantee. We can do that more than that.

▶ 2:48:29 Maya Jamaleddine: So what reassurance do you provide our residents right now? Like I keep hearing from you. We're gonna get through this just you know, you have to trust me we're gonna get through this. What other reactions like we wanted to have? Cured plan. Absolutely. So what what is it that you providing when providing is the

▶ 2:48:53 Speaker 4: fact that we we know what our we know what our obstacle is. We know what our challenges we all have the ability collectively to work to dress that we have the resources. What was quite different than some other communities if I may do the chair. Is we're positioned. Structurally as a extremely healthy financially, we have seven stabilization funds over eight million dollars collectively. We didn't have that before. seven stabilization funds covers contracts suits and claims selling wages goes on and on it's regular stabilization fund. Special education stabilization, right? Why do we have those things? So when things happen like this we have resources to go to we have four Enterprise funds all with your own Reserve funds that minimum 10% each one of them. We have the we have developed a strategy looking at even and looking at free cash. That we we maintain a desire to continuously provide the necessary safeguards so that when we've been economic downturn things don't turn out the way we want we want that we want to have security everyone wants security. So we have taken the time collectively to build that reserves up. So we're not in a position of weakness. And that's one of the greatest things I can say to the community. You're not a position a weakness. You have a structural problem because the type of Revenue we want is to be recurring but we have to work to get there. It doesn't happen on its own. Okay.

▶ 2:50:34 Maya Jamaleddine: said I need to provide service for my kids that need special ads and we are facing those issues right now right there is there is not

▶ 2:50:57 Maya Jamaleddine: Enough support for for those kids right? I

▶ 2:51:01 Speaker 4: can't say that. I'm not the school Community. I don't I don't make those judgment. I don't make those decisions. I'm

▶ 2:51:06 Maya Jamaleddine: not saying you for you to make those decisions or or judgment. But when can I provide the promise that like timeline do we have a timeline? Do you have kind of like you have a plan? Obviously, do you know when? This is going to be resolved or when we're

▶ 2:51:27 Speaker 4: gonna get through. This is my it is my desire here this evening that upon the certification of free cash. that I apply a certain amount of that to address the deficit for the school department. for 23 and that we also give the school department the Medicaid reimbursement, which is approximately 262,000 on top of that. Those would be the first two allocations. We make from free cash that get certified this year from the chair. I'm sitting in right now. I will commit to those two first allocations. Right up front to get the school department made whole. but the fiscal 23

▶ 2:52:15 Speaker 6: councilor Williams

▶ 2:52:20 Speaker 4: office in approval obviously

▶ 2:52:25 Speaker 8: Okay, so I have a couple of like a technical questions about the presentation.

▶ 2:52:30 Ryan Williams: So you've got the budget snapshot which I recognize from parent University. It's got school supposed to 37% So if I look at the Fy23 budget documents that are on the city's website. The math I get is 37 million to the schools out of a 95 million dollar overall budget. I'm sorry 35 million to the schools out of 37 or 95 million overall budget. It's thirty seven percent. There's a 2% discrepancy between what's on the slide for the budget snapshot and what's in the budget documents and that's about two million dollars. and I don't mean to suggest that there's any like You know missing money or anything like that. What I'm what I'm suggesting is that the numbers here are a little bit fungible and I struggle with them somewhat when we talk about the schools. I was really interested to hear you talk about the decision to move Public Works to move school department resources into public works because I am looking at the next slide. We have school spending a non-school spending. These used to have numbers on them the numbers of disappeared. You set it out loud. It was 60% if Let's just use your 39% number. I would say it's actually 37% the slide says 39% then the next slide says 60% best case scenario here. We've got 21% of the Cities budget that's allocated to a different cost center than how it's being utilized. Because you're saying that 60% of the city budget. Is school spending? and either that means that we've got these costs

▶ 2:54:08 Speaker 8: in the wrong center

▶ 2:54:10 Ryan Williams: or I mean are we overestimating this a little bit and and what would the benefit be of Having it in the budget this way. I understand the operational benefit of like not having a public works team operational within the school and having two kind of parallel sets of Public Works teams. I really understand that benefit, but it's easy to charge the time of Public Works staff to the school department like we do with this sewer and water departments, you know, where we know exactly if some guy spends at this time in sewer and half this time is water, you know? Yeah, he's in there. He's in the super budget. He's in the water budget, but when it comes to the school department, it's 100% DPW same thing with the nurses and the health department. Can we just start charging? The time that these people are spending in the schools to the school department so that the community can see the full extent of what we're spending on our schools.

▶ 2:55:09 Speaker 4: A couple of things through the chair we do that the schedule one and schedule 19 reports that the city prepares and gives to the school department each and every year for Jesse. We they these Jesse outlines the guidelines. They make the determination as to what you are going to be able to allocate for those purposes. Let's take one item health insurance some communities have like we do the health insurance Budget on the city side of the books other communities have split it or divided in half of it sits on the whatever it is on the city in the school has theirs the objective of the schedules that were required to submit is so identify what is school and what is city now, if you look into the budgets themselves, we are beginning to process. We've done quite a bit of it. In DPW, for example facility division, you'll see a special code there say 100 for the sake of a number this evening that identifies that is being a school. Cost we do that for a reason because at the end of the year, it's like you've talked about you want to be able to identify what was applicable to the school. So we roll up those codes so that we can have the number at the end of it was actually expended. So we have an actual number what was expended through the immune system for that service for the school department. So that is the best we can do given the Dynamics of how We structured it for Medicare Medicaid's the same things on the city Side. pensions on teacher pension that allocation the city Side you can go through the whole list the rest of the whole nine yards. What's in the city Side? What's the supports the school department? So the what I was trying to stress with DPW is that it took a lot of I'll say administrative and related time that we spent by school officials. Obviously that to take care of their buildings and the like can shifted her over to DPW that's most qualified and able to do that. That was the intent is we don't want to spending time doing that one spend time on the kids. So yeah, you're fully devoted just to that education not fixing roofs and worrying about Windows because that's not productive. So that was the one of the objectives of making that transfer over. And I think it's been it worked out extremely well, and I think that was one of the better things we've done. But again, this is so much of it is just dictated by. compliance and you don't just report they compliance then you have to have an audit they order your end a year information, which I think everyone's aware of is to ensure that the allocation you're providing is accurate and reasonable so we get audited every year almost submitted to Desi so I have no questions in my mind that we're not full full compliance.

▶ 2:58:27 Speaker 8: So I have

▶ 2:58:30 Ryan Williams: talked to school principal here and there have yeah my own two kids are in elementary school. And they frame it a little bit differently. The way that I have heard the counter argument for this is that it's difficult for the school to rely on outside managed resources nurses public work staff because they can't always get the priority that they need or they can't always request Services. They're asking for basically money in the form of time from another department to come in and that department holds the budget if you look at dlss and I have yeah, you'll see that Melrose is well far and ahead on DPW spending in terms of other communities and I happen to love what DPW does and I wish we could spend more money, right but you know in this moment of prioritization I have to ask again. Is it possible that we can load some of these costs up front and to the school department so that their contained within the school department? You know the estimate, you know, five-year estimate or whatever we're using for this so that the school department has that larger budget. It's it's showing up to the community. They're seeing because the big talking point is you know, Melrose is spending 37 34% of it's whatever, you know, people get the numbers wrong, but that we're not spending enough. If you really want people to believe that we're spending 60% of our budget on the schools. I think that they have to see that that in the operating budget that a portion of that is in the School departments budget. I think it has to live there.

▶ 3:00:05 Speaker 8: I'm not CFO, but that's my

▶ 3:00:07 Speaker 4: Point takes one point well taken I thank you. I

▶ 3:00:11 Ryan Williams: have I have another question. Could you you've mentioned a structural deficit several times? This is a slight point of contention between the superintendent and the mayor. Can you explain the structural deficit in plain English versus let's say a nonstructural deficit and talk to us a little bit about what you're projecting is the drivers of this structural deficit expense.

▶ 3:00:33 Speaker 4: Good, excellent question as we've had in the past again. This is not the first time this has happened. when When right now for example that you have expenses that are recurring nature. You don't have the recurring tax revenue to? Cover those expenses right now. So you can always you can always reduce other departments make shifts in that way and reduce staff and other areas to compensate for that. So if it's 500,000 here and DPW and say listen, you know, we're going to cut this by 500,000 and transfer that 500,000 over to the school budget. For example Then you you've assisted by half a million dollars that reducing that toots that's caller 2.5 million dollars difference for the school department down to two million, but now it's recurrent. It's going to recurring basis. It's in their base budgets built in when you have a structural deficit. You're actually unable to use your regular tax revenue. even new growth to cover that cost. So unless unless you make a structural change. That's going to go with you next year. In the year after that because you haven't filled it with with recurring Revenue. You could plug it from here to Kingdom come at one time Revenue. That's not the answer. Because you still really not funding that where it needs to be funded. You're not providing Assurance to anyone that it's it's a it's a good practice and don't worry about it. It will plug it next year. That doesn't work. That's unhealthy. So the objective is that and I wanted to make that change we talked about talked a little bit about it earlier. Then you would say okay. We're going to commit to giving for example school department. So much money next year on The abase over and above what they typically would ask for say two and a half percent say plus another half a million for the sake of a number. And you begin to wean that down but you'll know at that point that that half a million you're going to give them if they again on the base over and above has to come from somewhere. So we either raise revenues in some fashion or you're going to have to look to be more efficient in others. It makes them adjustments to how you do business. How is that done again? Same thing we brought the ambulance service and that was questionable at the beginning. I was there I did it. Was saved eight firefighters a job. It had to happen. We didn't lay out those eight men. So you were gonna have to make decisions not you individually, but we as a community have to say for priorities. What are our priorities? Well, we do we do have to make decisions. Yes, but individually absolutely but it's priorities. So let me solutely. Let me

▶ 3:03:23 Ryan Williams: let me bounce back to that second part. What are the drivers of this? What are you projecting? If you can see a structural deficit it means you see structural expenses in your projecting them into the future. What are the categories just like

▶ 3:03:36 Speaker 4: top without going into any detail because I'm not ready to do that and I don't have the information the way I want it right now. Obviously special ed Transportation costs have been the drivers and if we find that historically we've seen a special let go boom. Boom. Well, is there a better way to deliver special ed services? I don't know. I can't answer that question. But we do know the cost of going up up and up so we can't ignore that that's happened. That's a reality and those are absolutely not negotiable. You must pay special ed period just like I must pay pension. That's the Law you must pay your debt those on optional So to me, it's becomes a reality that it's not it's not a nice thing to have. It's a must have special ed must be funded how we fund it whether we use permanent Revenue one time revenue for a short term. Do we get it up when we need it to be is what we have to decide on in the way she get there but it does but you have to take that into consideration we do I do when I prepare the budget will begin to prepare it is that we have for 24 we need to take into a fact that this is the issue here. That's our goal. Let's bring this down that side Target right here. Do we have to do now you may end up with more state aid at some point. That's great. But that's never a certainty as I demonstrate this evening and I don't count on that if we do, it's a win for everybody. But right now we're going to a tough time. I think personally in the Economy, so I get a little bit concerned that. You know, I may not materialize like I did in 23 for the student Opportunity Act, which was great. I would love to see another year of that and a couple of years and we can really move this process forward. But we don't have all the factors in front of us tonight. We're not going to have them. ever it's not how it works things as you move forward think change has happened. Revenue comes in expenses change you will have to work with that as you go through it, but has been made. You know, she mentioned you have to have an objective. What is your objective? You have to know what you objective is. The objective is to again in my opinion is to make certain that we have the necessary resources so that those services are provided period Mr.

▶ 3:06:07 Ryan Williams: Delaware. So yeah, you said That first of all your commitments to the free cash and all the solutions. I think the first time we've heard this right, I mean it's first time I've heard it. So that was good to hear and I think that the public will really appreciate that. There is some kind of a non-process in place at the moment that has a Time window if they make

▶ 3:06:27 Speaker 4: candle that's how we addressed the last time with this stress 750 deficitly we use free cash to at the

▶ 3:06:35 Ryan Williams: people remember that I didn't go cold patch reporter and get some get some headlines. You also said that you're looking into stableization funds but we were here like, what is it now three hours ago and we we discovered all of us together that the marijuana fund was actually established with the primary intention of funding schools in times of fiscal crisis, and it didn't seem like at the time anybody really acknowledged that in the proposal that was put before us and so, you know, I in this all hands on deck moment. Hearing that. There's 500,000 in a fund that has in the enabling legislation. We should really use this if the school is in trouble. And that it hasn't been brought up yet, you know six months ago. Somebody didn't say. Oh I know right away the stabilization fund. That's what we're going to get this money from it's been there for three years and we're gonna go in there and raid that fund right now and you know what, it's recurring Revenue. So next year it'll pop back a hundred grand and we'll spend it on the mental health, you know in the and the stuff that we need to spend it on at that point that that for me is challenging because when when people who are just kind of following along at home and maybe don't have access to things like the city council does they say to me? Why not that money I have to go. I don't know.

▶ 3:07:58 Speaker 4: if I made for the chair, and I think it was brought up, but the That is one thought that we've already been working for and again, what why I cautioned you the the city council earlier was that I would like if we could make any some type of commitment for those revenues that it be something that we have confidence will be the year after year after year. So if we say for example that'll get hundred thousand dollars to the school department. That they'll know that in 24-25-26. It's going to be there. That's why I said the fund is still not mature. So before I would put my neck out and say I can promise you that it will give you 200,000 every year from it's fun. I'm not ready to do that. But if it continues in the vein, it has hopefully we're close. Yeah, I mean then we have something really good. That's a good thing. It's recurring revenue and that's where a goal is. So there's no reason you couldn't allocate in that sense towards it but this is vindicate exactly right just that we want to be sure what we're doing again. He's going to be sustainable. So we don't say oh do we fall here? We shouldn't have allocated that much money because they didn't come in there what we wanted because I don't know then we hear that that's not gone and that's not a good way to be so as we've done all the time. We're always careful. Well always take a balance the post that we don't overextend ourselves. That's when you have a problem.

▶ 3:09:20 Ryan Williams: I appreciate your partnership. Thank you. All you spending basically all night long with this and we have another order out of us. Forget it and I have no other questions. Thank you.

▶ 3:09:30 Speaker 4: Anytime and again, I plan to be here again the board any question. I've always called me. You see my office. I am always available for anyone at any time.

▶ 3:09:39 Speaker 6: counselor Stewart

▶ 3:09:42 Robb Stewart: Thank you madam chair. It's getting late. I'll try to be brief Mr. Del Rosa. Thank you be for being here and to the staff Ms. McClellan as our mother. Thank you for staying late. I know it's like we appreciate you being here. You mentioned the comprehensive Feast study. Could you touch on time just briefly touch up on that? By me the comprehensive fee study. Yes, I'd be

▶ 3:10:04 Speaker 4: happy and a couple elements that we're looking at now. We haven't had a real. Analysis of a fees from building departments through trash for a long time. I think trash fee was passed in 2005 and if all of a sudden our sanitation costs are exceeding what we're asking the residents to pay. That's a problem. Because now the cost has gone over and above. Well you collecting. So that's another item. We have to look at no different than building permits or other items and not only yes, but the school department, too. Programs that should be self-sustaining should be self-sustaining. Because when you don't do that. You're eating at your core. Over more and more every year as it goes by because you have a fixed income a fixed dollar amount coming to cover costs that's going like this say wait a minute to provide that service that it doesn't it doesn't match anymore something's off. So excellent question. That's the kind of thing that we have to do, but the school department also has to do that. I would ask. Because these implications across the board it's not just us so it's and that's why candidly, you know, sometimes the water gets rough, but sometimes you can you know, whether any come out better because you realize some of these things that perhaps you haven't spent enough time on for getting things more efficient or up to date you will know. So in some way we will spend an awful lot of time on that.

▶ 3:11:40 Robb Stewart: Well, that's what I thought. It was. I'm glad to hear that. Yeah, because to your point efficiency a lot of times beats out. Just trying to either cut a reallocate sure and you know, I think it it is. prudent for the administration to put pressure on the individual departments to go and find some of that cost and weed it out. That's gonna make a big difference huge could not

▶ 3:12:06 Speaker 4: agree more. Yeah.

▶ 3:12:09 Speaker 9: so the other area

▶ 3:12:12 Robb Stewart: now, I know you talked about what you did 10 years ago, but a lot of those cards have already been played right like, you know, there's no opportunity for insurance anymore. I don't think a wage freeze would work this day and age, especially when you have eight percent inflation. Holding Cola, you know a lot of these. So what I've heard and what you said is you're going to apply a certain amount of free cash. Yeah for the short term. That's my object. And then you're gonna need to reallocate. re-examine how that how the budget structured to console Williams point, you know, you need to move the percentages around a little bit right if you're at 37% thirty seven percent. And that needs to go to 39% Then you need to find those two percent, right even after. That's going to be information. I think that will help us when we get to budgeting.

▶ 3:13:12 Robb Stewart: For to understand what the strategy is so that when we can make a better informed decisions when individual departments come to us. To explain what they are. Trying to accomplish. And what in the parameters that they're giving us because I think there's going to be a lot of hard choices that we're going to be making next spring all across the board including in this Council. So that would be extremely helpful to see what the strategy is. to be able to help us make as I said better informed decisions.

▶ 3:13:49 Speaker 4: Until the appointment exactly, right? Because we've actually begun those internally a little bit conversations that every single department has including myself as responsible to do that. And that's what has to happen. That's what we are today. Because we're going to next year every dollar is going to become even more sacred. And it's going to have to really be justified. because we that's the point we have to be at until we stabilize what we want to stabilize which we will yeah, and again right now just for breakfast. I am not assuming any new state aid right now for next year right now my preliminary analysis. I'm not using any increases in Chapter 70. Or state aid right now, even though I have a two two billion dollar

▶ 3:14:35 Robb Stewart: but budget surplus right? I mean, look at this

▶ 3:14:38 Speaker 4: the past don't give me go past couple of years ago 2120. We actually cut us happy the time then, you know flush. Oh, how could that possibly be someone where we get less money. Fascinates me. So the the other point

▶ 3:14:51 Robb Stewart: that you did bring up early on that I think is concerning and this is going to be something that will need is the health and Medicare. Yes, almost three-quarters of a million dollars that cuts quite a bit into that 2.8 million. So basically you only have two million. You don't have 2.8. The math is pretty simple. So if you only if you're going up by basically two percent.

▶ 3:15:20 Robb Stewart: That anticipated slow growth that you talked about and the administration. Needs to grow. at that same pace So and we cannot be influenced. or distracted by arpa or other you know, let's not play. Hope Finance right where we're going to be relying on. Grant and so forth, right we need we need to be fairly strict in terms of how we go forward. So that's I just that is feedback. Thank you. I'm not looking that's another question because this is concerning.

▶ 3:15:58 Speaker 6: Thank you membership councilor Eccles.

▶ 3:16:01 Speaker 10: Thank you manager. Thank you for being here tonight, Ms. McClellan

▶ 3:16:04 Jack Eccles: for the second time this week. So just to be clear, you know. When you talk about all the things we did in the early 2010s, that sounds yeah. Fairly unpleasant and not really where I would want to be. As a city and then when I look at free cash for 2018. In the percent we were spending an operating and presumably deferring capital. I didn't dig into what those looked like 17 16 15 after you know failed override in 2015. Is that kind of where we're headed to you know, as we think about a structural deficit using free cash is deferred Capital expenses.

▶ 3:16:47 Speaker 4: Yeah, I'm not looking to. Not do Capital expenditures. But I am looking to ensure that. If we do take certain ones on and again, I'm talking outside of anything that would be bonded one time, you know, just the capital that would fund from precash or the capital stabilization fund. I think these absolutely you know reason you can continue to do a segment of your program to do that. We typically 20 for example, we use 20 to 25% A free cash to go into the various stabilization funds depending on the need for that year. And same thing with capital you always want to have it distribution so that you are doing it as I mentioned earlier that you have to continue that cycle. And I know that's you may not be able to do it at the level you did in the last year. Doesn't mean you don't do it though. You always do it. It's just that you have to be realistic and say based on what we know today. Probably gonna have to bring it down. And do something less but it doesn't mean you don't do it. So no those and again it all fair points. We always again I hate to use that trim but it's a balancing. You always want to balance. You don't want to just pull away and say that's off the table you want to but a sense of balance then everything really works so much better than and again the more you can pay in cash. You don't leave at least cost. You don't have those. You don't have interest costs you pay as you go which is the Premier financing way. They want to see anyway. When you get it, it's done and you own it and it's over with so, I mean what that was kind of philosophies never change regardless of the economy.

▶ 3:18:40 Jack Eccles: Thank you. Can talk a little bit about how our residential mix inhibits our ability to raise revenue. I think I don't know if it's very intuitive. I get it but I think it might be worth touching on because it was in the slides.

▶ 3:19:01 Speaker 2: Melrose to a community like Wakefield, for example because we've been using that example. So they have double. Double the CIP right value-based, right? So for example when we're just looking at new growth which adds to the levy how we get new growth there is Say their CIP growth. When we're looking at our residential growth versus CIP growth, it takes value growth when you're adding up all the value that comes through in New Growth. You apply the residential growth to the residential tax rate from last year to get the CI to get the residential growth dollars that you're adding to the levy. If you have more CIP growth, which Wakefield happens to have a lot more personal property utility utility value. So when they have growth in that sector they're applying it to their higher they shift all the way 175 and they're applying that growth. At the higher the CIP rate from the previous fiscal year. So then it's going to add more to the levy base each year and then it's like cumulative or compounding if you will.

▶ 3:20:25 Jack Eccles: Make sense. And so that was actually a question. I had to Wakefield. Most of their growth is is CIP not it's not that they've been out building us and in residential it's that they've been having more CIP

▶ 3:20:38 Speaker 2: growth. Well, I know they they Because they have like a lot, you know a double the CIP or more than we do. So it's just like they're they're applying whatever growth they have to that higher rate, you know, so it's it's kind of It's always double. I mean, it's been double basically before but they're so they're they're utilities are doing projects along the way too and they're gonna eventually have they're kind of waiting for the growth to come in for that.

▶ 3:21:10 Jack Eccles: Thanks. Yeah, I was pleased to see that new growth was kind of a tool in the toolbox where I don't think we're gonna build our way out of this problem. But yeah that You know, it's a tool in the toolbox and there's certainly a lot of potential. You know, I don't you know, I look at every project and I see this potential, you know for to have more housing in Melrose in New Growth and I see every downsized project is opportunity costs. So if I

▶ 3:21:36 Speaker 2: can add to that, sorry. So basically like for the big project that just happened the 99 Washington Street, for example, like that would all be residential growth if that was like a commercial growth. It would be at a higher, you know at the higher rate because even here we're shifting to the you know, last year was the 165. So so you see how it the effect of it? Yeah.

▶ 3:22:01 Jack Eccles: Thank you. And then it looks like just looking at the debt graph. It looks like we've got we know we have a lot a little bit more coming on or are we anticipating kind of feeling? A squeeze there as we go up closer to like four to five percent of our operating budget.

▶ 3:22:21 Speaker 4: If I look at the sun, yeah this one here. Thank you right now. Thank you Kevin the Fy2022 is not there. The percent was 3.14% Okay, and then for 2023 the orange 2.98% 2024 Is 3.13 percent? 2025 3.99 2026 4.07 and then it jumps down to 3.69 3.5 Etc. Again. These are rates that we're using that are. I believe it's 5.5% for permanent 3.5% for temporary which are higher than we've used in the past. We've adjusted the interest rate assumption just to be sure that we're going to be in in line to meet that obligation and we're not overextending ourselves. So we rather once it comes in. We actually Bond it and it's less again as I mentioned earlier we win now, but we never want to try to shortcut it take on more projects that unrealistic rates that we know and it's just not going to happen.

▶ 3:23:33 Jack Eccles: Awesome, and then just just a couple more. I think that one thing that gets we talked about inflation, you know a little bit when we talk about our expenses and you know CPI inflation is 8% That's like things people buy for the most part. Like I think that there's an important distinction between CPI inflation 8% what people feel in their wallet and what the city purchases. So can you talk a little bit about that?

▶ 3:23:59 Speaker 4: He sometimes it's a great question because sometimes people think well you're insulated and you know, what we do have let's go contracts. We do have some commitments we've made for energy to the planning office about to go up in particular is an excellent job. That have locked in rates at a certain lower than them. We're seeing today in the market. So with those Energy savings is great for the duration of those agreements. It does obviously it affects us. Project costs more money you go outside. You are consultant and charge more money gasoline. Of course, it affects us. We we have vehicles that because most of our vehicles still around the gas. So we see those higher costs on our side utilities DBW in particular. We're not we're not exempt from any of that. So whether it's You know eight percent was five percent or seven we own it. But but as you indicate it's going to impacts out budget. So we have to really think you know, even more hard than knowing that and unless that actually begins to go down. We should expect to probably to continue for a little while. I hope it doesn't but I don't think it's going to get away from it that fast.

▶ 3:25:10 Jack Eccles: Yeah. Yeah, I think that the takeaway with the two and a half plus new growth is yeah eight percent is yeah haircut every year right and that's that's terrible worth. Just kind of hammering home is an important point.

▶ 3:25:25 Speaker 6: Thank you Vice chairman.

▶ 3:25:27 Speaker 5: Thank you madam chair. Thank you all for being here so late. Thank you. Just a couple of clarifying questions if you're looking through the presentation.

▶ 3:25:40 Leila Migliorelli: The slide 30. Oh, it's like slide 36 and there are attachment but the slide that has the new growth on it. So I think it's To above this it says on this slide New Growth 500,000, but on Monday night weren't we talking about a hundred a million?

▶ 3:26:02 Speaker 5: It's the one with the circle.

▶ 3:26:04 Leila Migliorelli: No, no the one that's like fy24 tax. Levy estimate.

▶ 3:26:10 Speaker 4: You absolutely right. The new growth that we're talking about is 23 not 22. Got it.

▶ 3:26:18 Leila Migliorelli: Wait what 23? so our 24

▶ 3:26:22 Speaker 2: So our current New Growth for this fiscal year, it just got certified in November. Yeah. That was the that was just over a million. Yeah, but for the past like five six years, we've been averaging like five to six hundred or in the 600s. So we've always been projecting. You know around 500 so because because of that utility growth that was like unprecedented this year. We just will continue to project the 500. Okay.

▶ 3:26:58 Speaker 5: So this is just like a Because of thing okay. Got it. Thank you.

▶ 3:27:07 Leila Migliorelli: So this the like the origins of this order was sort of, you know, a follow-up from our special meeting in October and then the subsequent presentation by CLA at the school committee meeting on October 18th and kind of going through some of the you know, where Hannah York came and spoke and sort of Unwound some of the issues that the school was facing. So just kind of you know, what I've been doing over the last several months is true. Yeah months is to try to figure out kind of make sense of that and how that impacts the city's overall finances. And one thing that I have a question about is When we were voting with the the school committee, well Hannah York made a comment that there is a hundred and fifteen thousand dollar discrepancy money that did not get transferred from the city into the schools and then looking that's how she phrased it. And then looking at our budgets what we were when we were proving them in June the school committee and superintendent had a narrative budget that showed, you know, the city contribution which when you look at the number only went up 1% between fy22 and fy23 City contribution the offsets infamous office offsets, which we will no longer be looking at and then Chapter 70 and that those three things totaled 40 million 253,851. So if you back out the offsets and you back out the chapter when just back out the offsets, it comes out to 35.6 million but in the city version of the budget, so when we vote on the you know, the bottom line budget of 95 million that number for the schools was 115,192. Can you explain that discrepancy between what the schools presented as their budget that we voted on and then us voting on a bottom line budget that included an amount for the schools. That was less and how that relate. That was the exact same number that Hannah York brought up in her presentation that we needed to that needed to be transferred in and what that what's the difference between those two things because a little bit concerning that we were looking at two if you look at the not only the The Narrative budget by the superintendent, but there's a municist report attached that which has the 40 million dollars for the schools, which is different than the municipal report that we looked at and approved.

▶ 3:29:52 Speaker 4: Yeah, the number you approve was the correct number. That we approved we the number that the we ended up with 62 apartment 62,000 that was provided to the school department at the end of the prior to finalize the contributes to the school department. We ended up through the mayor's office to say we'll give you 62,000 towards this additional money the 115. I don't know candidly where that originated because if it's in a school report didn't book doesn't belong there wasn't some provided by us. So I said the same thing to anyone I've talked to and they mentioned it to me. I don't know where the number came from because they didn't come from us. We committed 62,000 which we gave if there's a difference it's because they asked for a certain amount and we said we'll give you this amount of that money then if they want to make up the difference to offsets that's up to them. But that wasn't on our decision to make they chose to do that news after that's great. But we said we're going to give you 62,000 more than that. So that's up to the school department. Not the city. So the budget you receive was the accurate number. So we so the

▶ 3:31:02 Leila Migliorelli: school budget. So when you look on the report and you look in the digital budget presentation on these website is 35 million 511,659. You're saying that now you're talking about the 62,000 number is that in that or not?

▶ 3:31:19 Speaker 4: Yeah that whenever number we ended up 35 Plus. That was it. That's what we ended up and that's always been my knowledge until I started here in this 115. What are they talking about? Because if again what he would go back to what originally probably what would cause a lot of the distresses when they bundle the other offset items and other funding sources together with the budget all of a sudden you're on the same sense of control. So what you're seeing now for 24 The initiative will be unbundled so that things those kind of things don't occur on bundle it and have just just the city contribution with the Chapter 70 for fiscal 24. Then you have your offset items over here. You can even I mean, I think the discussion has been setting up actual budget for several of these offsets in their own way like ECC or something of that nature so that they stand independent and they're not co-mingled and then there's so much easier to manage to review to understand you don't get extract them from the regular budget. That's when you have a problem. That's why you look at our budget. We intentionally isolated all the all the Enterprise funds outside of the budget. They all stand on their own and that's how it's so much easier to manage.

▶ 3:32:41 Leila Migliorelli: It's the right thing to do right now. I get that. So in that presentation, I'm just going back to my new Notes too because I watched it again. He what Hannah said was that 115,000 when she I think mentioned to either you or someone in your office that there's always a disconnect between what the school budget and the city budget says for the schools. And then the expectation is the school district would cover the cost of that difference that is always there through offsets. Like you said you allude to that but I'm just curious what that always a disconnect no, no

▶ 3:33:12 Speaker 4: not always a disconnect. Okay work with Hannaford, and I know we're very well. The disconnect is not that the disconnect is that if If they want to use other funds that are not under our control to do different. Services or provide other staff that's up to the school committee in the school department not us. But when we provide is just what the city's contribution is period

▶ 3:33:39 Leila Migliorelli: So, how could there be? I don't know how munis works but how would there be then immunos report that like shows their amount? With with this $115,000 in it and then immunos report that shows you're like I would think that that would all be the same but not I honestly

▶ 3:33:58 Speaker 4: I I never up, you know, I don't know where they come up with that number. Okay, something don't even if something we provide them. I would tell you in a second. Okay? See I know it's 62,000 that number I know. Yeah, and you're the number like I don't know what it makes no sense to me. All right, maybe I'll send

▶ 3:34:16 Speaker 5: the Just the attachments we have so you can kind of look at

▶ 3:34:21 Speaker 4: it again, and maybe you want to be happy to look at. Okay. Thank you.

▶ 3:34:27 Leila Migliorelli: So that was that was one question. I mean, so when you and I kind of came to this discrepancy by trying to look at the amount of money that the city is contributing to the school. So which makes me sort of the fact that there's a discrepancy there makes me doubt sort of all the numbers I'm looking at. So when we're looking at Chapter 70 in the school appropriation from the city and we're just seeing like a one point, you know, depending on which number we're looking at like a 1% increase in the city's contribution to the schools. So it sounds like what you were saying earlier is that you're thinking of increasing that over three year period that would be your thought in terms of plugging the whole that we have the

▶ 3:35:10 Speaker 4: Yeah, my thought would be that. Once we recognize what the consultant indicates is the fy23 structural deficit number. I don't have that yet. I have an estimate. But then we work towards building the school budget to over time to get more on their base than just the regular say two and a half percent increase for example or two percent to begin to draw that down. So that becomes a permanent part of the budget and not dependent upon a one-time Precast or other fund allotment every year from the city. We've got to get it we don't want to do that. It's not really good way to do things. So we're going to do with over time. So they'll know that over time. We're working towards reducing the one-time contribution. So when we need to do anymore So eventually they have what they need a base that's not going to happen overnight and it's predicated. A lot of fact is that we don't even know about yet, but that's the goal. The absolutely right. That's the goal.

▶ 3:36:18 Leila Migliorelli: I think you know as it's getting later too. I'm just thinking more now of this January meeting what it could look like and Thinking also about you know, just the mid-year the mid-year Financial update but looking at the stabilization fund balances to to counselor Williams earlier point in the discovery that we made that there was this, you know stabilization fund that could be used to to the worst supposed to be used to help with the schools. Yeah, I think in January if we could see where we're at with our stabilization funds what we have in there what the intended uses are so people understand that money available. I think for me just sort of overall. There are pockets of money. There's like these little opportunities that as you said the shift around, you know, we've got, you know arpa that is you know projects that have been committed. Some haven't been fully funded. If we look ahead of the free cash presentation same kind of thing. It's just sort of like a lot of balls up in the juggling up in the air. So I think what we need to do is then understand who then makes the call about. You know if we need to give more money to schools and it's going to cut something on the city side. I mean people do need to know that like how city services would be affected if we have to then transition like At what point? I keep hearing this sort of rhetorical and it's just not necessarily by anyone in this room, but just this rhetorical. Well, we have to make a decision. When is that decision get made? And by whom and I think you know for all of you here the three of you that you're the the numbers people you are. You've got the you know your hands-only what's going on all the information you're there to provide that information. So that leadership can make a decision about what to do next. You can provide like this is financially sound not financially sound but at the end of the day the the difference between, you know, funding the schools versus, you know, funding something in the I don't know. Parks department something like that. That's not your call because that's not a financial heart. That's not a risk to calculate. That's just what do we value as a community? And what are we going to be supporting? When is that get went to the best of your knowledge? Like when is that point happen? in the budget process

▶ 3:38:38 Speaker 4: it happens right now between what's happening right now as we sitting here now we've already the me and I have already discussed a couple of thoughts and considerations for 24 because we're gonna start the budget process in January for 24 regardless of we have a state a number of any certainty or not because we can't not Get them keep the bus going so it's happening right now. And again we look at our recommendations. Look at Alternatives. We look at different protocols that might work and timing is very important as you indicated, but it's really now this is the time that there's no I don't know. Why would we wait another moment every moment we spend now got to be dedicated to just doing that. How do we how do we write the ship in a way that's reasonable and it is not going to You know disrupt services to a point where you know anything in a negative sense can happen. So I mean, you're absolutely right, but it's now the time is now we don't we run out of time. We already know what our issue is. We know what we must do and to the extent that we have to do it. So there's no I don't need to spend any more time thinking about I know what I know what the issue is.

▶ 3:39:54 Jen Grigoraitis: Thank you counselor Carm Chaney and Council care.

▶ 3:40:00 Manjula Karamcheti: Okay, we're to start first. I will start with thank you for being here and you know for all the information you're providing with exceptional detail and asking our questions answering our questions. It's so appreciated. One of the questions I have is you know and trying to learn more and research and understand the percentage of what this city provides for the school budget. I've found a lot of different numbers and I think in regards to what counselor Williams was saying like transparency is so important to even understand where we're starting from, you know in one of the charts. It looks like it's 60% for school school funding the blue and red one. We've talked about 39% that's in another one of the charts in your presentation. Also 37% in DLS. It's listed as 38% I've seen onesie it's 34% So that just makes it confusing. And

▶ 3:40:56 Speaker 4: so I think so right you were so right I

▶ 3:40:59 Manjula Karamcheti: the exact same so getting a sense of what is it really? Like we need to know collectively as a city. Like what is the amount of money that the city is paying for the schools? So having just really getting that number and not having it be different and understanding what that number is. I think is really important.

▶ 3:41:23 Speaker 7: Do you know the number? Like just like what is the real percentage

▶ 3:41:28 Speaker 4: the 23 will yeah, we'll put that together for fiscal 23s part of my discussion next month, okay?

▶ 3:41:38 Manjula Karamcheti: So in one of the data points as well, and I think people have heard it before just are city is one of the lowest in terms of teacher salaries in Massachusetts and also for people spending so just understanding how that fits into the City and there are other funding sources as well. We're aware but still the data is with the data is we are one of the lowest in the states in terms of those two pieces. And so, you know as we're talking about this structural deficit And that how you explained that the expenses of a regular nature we have the expenses, but the money isn't coming in and we don't have the regular tax revenue to pay so I'm understanding that correctly. And so Within those structural deficit and some of this information comes from Senator Lewis just a week or two ago hosted a special hearing on the state of education and special education in particular and the percentages of special education numbers are going up exponentially. So not only do we have the current state of affairs with special education and the issues we've experienced which transportation for Melrose and across the state and really across the country. Those numbers are going to go up exponentially creating a further deficit. So I exponentially am more concerned about the whole we will keep being in when it comes to the school budget and really needing to think of bold ways to find the money in some way shape or form. and so great to hear you talk about free cash. I think that's something we've all had a lot of questions about in terms of you know, we have to pay for this thing and yet we keep saving money and putting it towards little projects over here, but we have a structural deficit. So, how do we shift? so again really glad to hear you talking

▶ 3:43:44 Speaker 4: about that and it's been done with you that in the past two for those years that we had it we did we use free cash to close it,

▶ 3:43:49 Manjula Karamcheti: but I guess my Sense in terms of like the deficit of which that we have and what the needs of our students are going to be and the needs of our city outside of the schools as well. I think when you move to Melrose you have expectations, you pay a lot for your house and you expect certain services to be available and that kind of thing so I do recognize that

▶ 3:44:14 Manjula Karamcheti: Which leads to sort of the question and a counselor Eckles? I think alluded to it people pay so much for their homes and really don't understand why the city doesn't have more money and it depends the tax levy in the CIP and what's coming in that way. So what are the various types of CIP growth that would help us. Sort of shift and have more capital for our overarching budget in the city and that kind of thing. What are the things we would want to see happen?

▶ 3:44:49 Speaker 2: Well, I guess. Like so this year for in particular? Just projects that like I said, like the the biggest growth that we had this year. For example, what were the radio Factory Apartments like the 99 Washington Street? So that was a huge growth but big projects like that contribute to but each year we seem you know, that's how we kind of realize the levy growth each year because we've had consistently had projects like that and they the growth is spread over several years because it's like just it construction completion of construction. So just what I explained earlier in terms of like it takes more residential value growth. To get the same amount of you know what I mean Levy dollars. So basically CIP projects. Well the utility growth that we had this year which was kind of like a one-time unprecedented thing the you know, they've been putting like conduit and conductors into our city. So that was a big project 22 million dollars in value which converted to like 390,000 of like to our Levy in one year. So that's that's the kind of thing so that those are that's one example of a project well, so it just to be

▶ 3:46:20 Manjula Karamcheti: super concrete like so it isn't the building of single-family homes in Melrose that is going to get us the finances that we need to grow our city budget be able to pay for schools. It's like other stuff like do we need to McDonald's? Do we need a Walmart to come in now? I'm I'm Asking actually quite seriously. Like what is the type of growth? Like what would our city need to like address the structural deficit of this nature and then like I asked that because if Melrose doesn't want those things and what are other things that we can do?

▶ 3:47:01 Speaker 2: Right, like it's it's just a strategic

▶ 3:47:04 Speaker 7: plan out of the city, right? It's just

▶ 3:47:07 Speaker 2: the nature. I guess of our community like, you know a town like or like Woburn for example would have growth from you know, the how they redevelop the whole mall or whatever that's complete new, you know CIP growth, right that happens over so it's just exponentially more than you know, so it's just the the nature of the community I guess and like you said we are who we are so

▶ 3:47:36 Manjula Karamcheti: Well, so within that if we don't want box stores and whatnot and Melrose I'm just like wondering about some of the other things we've talked about the percentage of free cash, you know, do we need to change our liquor laws and licenses to encourage more restaurants to come into this come into the city, you know, people want a brewery. Like how do we make those kinds of things happen? Because if I'm understanding correctly, those are the ways to shift some of the finances and have more New Growth. So, you know, one of the things I wonder about is our relationship with Mystic Valley Regional charter school, we lose money out of our district per pupil when students go to Mystic Valley and My kids used to go there. So I feel pretty free talking about it in terms of practices after October 1 in the school district like Mystic Valley if the students then leave they keep the money in the student comes back to the public schools. So that is something that I'm curious about like, what are we thinking about in terms of some of those kinds of moves? You know in terms of Mount Hood, where does that fit in in terms of that being a property that the city owns? Is there a way to utilize that more effectively. How can we utilize funds through Mount Hood to pay for the structural deficit? So just sort of wondering about again. What are options are in?

▶ 3:49:11 Speaker 7: Yeah what you would propose.

▶ 3:49:14 Speaker 4: Yeah, I mean candidly. It's this is the time to do just that what are our options? What haven't we done that we should be considering at least put out there and have a conversation on what's workable. What's reasonable everything that you mentioned? I mean candidly. Um, I'm like the all the above for me because the more we can do that the better I think all around but I don't know the Dynamics of the zoning a while that that I don't know.

▶ 3:49:45 Manjula Karamcheti: The other just question I have is really around those stabilization funds. I think you said that we have eight. I maybe heard that number wrong, but there's about eight million dollars in stabilization funds. I think I heard you say and Really? Just trying to wrap my head about that given where we are with the structural deficit in our schools having eight million dollars. Quote unquote laying around is just hard to understand particularly when special ed numbers are going up are most marginalized students are Learners who are the most vulnerable don't have the services don't have the supports. So just really on the grounds of morality. I just I wonder about that sometimes like how can we have this money and not be figuring out ways to put it towards education and kids. Well again

▶ 3:50:41 Speaker 4: through the chair you those funds were sort of specific reasons right suits and claims for example OSHA opeb Contract stabilization fund the capital stabilization fund the regular stabilization fund and the more we talked about this evening, for example, those all the specific purposes special education stabilization fund which we talked about those all specific purposes. We do use we have used this special educational stabilization fund to fund the schools. We have come to this Council you have approved it. So it's not that we don't use this tableization fund. That's a misinoma to fund those the school department. But those funds would drive in principally from free cash one time revenues. That's how those funds built up so much every year like a discipline. It wasn't from the operating budget taxation. So there's the whole different compliment. That's why I said earlier that we try to do like 20 25% of the free cash, but the amount maybe to keep those healthy because you want to draw on them. We talked about special lady you want to make sure the money is in the special that fun when they need it the school department. I need special ed, okay. Go so those are there that's why we want to do that and you can't believe those and say let's take all the money from stabilization this year and actually plea this one and that pretty one most stabilization funds that but what you get a gaping all the school department because you've been feeling it one time money. Nothing you accomplished

▶ 3:52:11 Manjula Karamcheti: nothing. Yeah. I think my question really is about how do we stop band-aiding? Yeah through these types of funds and how do we actually build it into our budget and the so there isn't a structural deficit you're

▶ 3:52:25 Speaker 4: actually right? And again, they make generally special and fun was not designed. To be used any other way. Other than needs by the school department anytime during the year, they need it. They can come and say neither the money for special ed because any time they could happen kids come in any time. That's what it's for. So those unanticipated instances when they need they need the money to pay for those purposes and it works perfectly when they do that and that's why I said earlier that really needs to be increased because we're all seeing increases in special ed costs. We know 500,000 not going to cut the mustard anymore. Let's double it for example as a consideration with thought so we do have enough money to cover when it's needed. So we're on the same page. Just how do we get there the best way I'm all in on that.

▶ 3:53:18 Speaker 7: like all my other points, I think other people have covered so

▶ 3:53:22 Speaker 6: counselor Gareth. Thank you. Thanks being

▶ 3:53:24 Mark Garipay: here. long night Council of Stewart asked one of my questions regarding how we're gonna get there this year with all of the changes that you've done. We've kind of taken the low hanging fruit over the years. Yeah and being dated our way but glad to hear that we're looking at other creative options to handle fy23 budget you had mentioned in the fy23 budget didn't say a specific number but our for a structural deficit but I think 2.3 2.5 million

▶ 3:54:02 Speaker 4: in that range. That would not be done. That would not be a surprise to me. Okay?

▶ 3:54:06 Mark Garipay: Fy24 Easton your experience. Yeah, if it's in that range, we're going to assume that it'll be an fy24 with inflation. Do you think that same number will be the same number in fi 204. Do you think you could be quite a bit more? We look in at potentially based on your experience over the years. three and a half million dollar structural deficit and fy24 with inflation and everything if we're at 2.3 2.5 now if I have 23

▶ 3:54:39 Speaker 4: I can't predict what that will be. But to your point, I think what I said earlier this evening, I stick right with it is that we know that doing nothing is not okay and that we have to increase the base budget for the school department to begin to address this in a financial way period so I'm working on the premise that it's a given that we're going to have a deficit forget the number for right now 24 I already know is going to be there but my goal is that we can make that continuously draw that down down that's outside of an override which I mentioned earlier. Which would you all as we just went through 2020? Um doing override to have that kind of Revenue come right in July 1st, for example, that's because you don't have that kind of money. Don't forget the money. The number talking is half of what the override was that's significant.

▶ 3:55:41 Speaker 4: So it's not 200,000. It's not 200,000. It's a real number. So to your point counselor. Just that, you know. to deal with that type of a A matter you really have to. Act you can't just can't not act the time to act anytime practice now.

▶ 3:56:08 Jen Grigoraitis: Thank you. No more questions. Thank you. I just had a few very quick questions before we wrap up. I just wanted to go back to counselor Vice chairman is point about the Hannah York presentation because I'm a little embarrassed to admit how many times I've watched that but the the direct quote from her was that there was a 115,192 disconnect between the amount transfer from the city city share plus Chapter 70 in what was in the estimated Revenue in the budget document and that this is a recurring disconnect. So I it would be I mean, I feel like we have so many problems in this has started to be like pulling the thread of a sweater but I think one of those is also within the community and for all of us feeling a sense of that we're all working off the same numbers that we can all kind of we have shared trust around what it is we're reviewing so it would be really helpful to get your assessment of what she's talking about particularly because she's been presented to all of us as an expert and what and what she's providing because that was a really unsettling comment and then I just is with all of the conversation that's happened. I I want to acknowledge that the three of you are working off of a buffet of increasingly bad options. I know you're trying to be you know, pick from increasingly insufficient amounts of money to keep everything up and running and I think we've really gotten to a point where they're just isn't enough funding anymore. I I know we talk a lot about a structural deficit in the schools. I know Patrick you're going to disagree with this, but I also think we have a structural Surplus. We exhibit free cash that we really don't have because we're not sufficiently funding our school budget to meet the mandatory needs that we have. So when I see that we have five million free cash coming in, but then we're going to have to put two million dollars in the school budget that to me feels like maybe we're approaching some of that a little bit backward where we're trying to create the image of Having excess Revenue to be able to use toward things we want to but then we're also using it to backfill known and recurring costs that we're not building into our budget. So I'm glad that we're working toward shifting toward that being in our budget and then I just wanted to confirm the 62,000 number that you mentioned 62,000 was that the cities contribution to the schools this year.

▶ 3:58:23 Speaker 6: So that I'm sorry 62,000, you know, no no,

▶ 3:58:26 Speaker 4: no. No, what was the 62,000 when

▶ 3:58:28 Jen Grigoraitis: you were talking with Vice chairman, right?

▶ 3:58:31 Speaker 4: It happens every single year with every single superintendent I've ever worked with here and in Plymouth, when you begin to to close up on the budget the end of the year prior to submitting your final if fiscal year request to say Jesus, you know what I'd like to have another teacher here and that's a hundred thousand. Well, we can provide based on our Revenue Source fifty thousand. So maybe you do, you know, you can meet us halfway and that you can get your teacher but we say we'll give you 62,000 to whatever effort they were in they wanted and that they want to do more than that. They have to use up their own offset revenues just to fund that it's happens all the time. And at the end that's when he said okay that mean I said, that's it. This is the we're done, you know, the negotiations are done the school has what they need we have we've closed it and then they can go forward with the budget to the school committee and and you But that happens all the time. You always work together. No different than I did with Cindy right to the tail every single time. I get together at the end. You know, this is we're getting closer and closer to what we'd like, you know what we need and then you just and then it's and then the mayor compromises and they work together. That's a standard practice. So the mirror ended up with saying we'll give you 62,000 to this effort. But that's the most we can afford at that time. That was it. It's not there's nothing no surprise whatsoever. It shouldn't be to anybody that happens every single year.

▶ 4:00:05 Jen Grigoraitis: Okay, and then another change? I know part of the other recommendations from CLA. Was that going forward the school budget is just Chapter 70 in general operating which I know we've talked about to your very your point at the very beginning about the delay in the state budget that's actually statutory that when there's a new Administration. They get an additional five weeks to submit their budget to the legislature. So I think just for all of us to keep in mind that both while the school committee is building a budget and while you all are building a budget internally, there will be a very little Clarity around what's coming from the state for anything Chapter 70 chapter 90 all of that. Okay, so we're all going to be working a little bit.

▶ 4:00:44 Speaker 4: In the dark for that I know.

▶ 4:00:46 Jen Grigoraitis: Thank you. Thank you for all being here tonight. Is there a