Um, >> okay, we're recording. Please go ahead. >> Good afternoon everyone. Today is the October 28th meeting of the finance committee. And seeing that we have a quorum, I'm calling the meeting to order. And to make sure we can hear and
all committee members can hear us, um, because we're doing this virtually, I will call on everyone just to make sure communication is working. Uh, I'm I'm Kathy Shane. I'm the chair. Bob Hegner, >> present. >> Councelor Hani,
>> present. >> Andy Steinberg, >> present. >> Joe Jane, >> present. >> And that's the committee. Um, today's agenda has uh three main or four main items on it. The first, we usually take
public comments at the beginning and Sean, we've got the auditors coming, so >> they're here in the audience. So, um I know you also said they were strapped for time that they have a hard stop or one of them has a hard stop. >> Yep. Yeah. If they could go near the
beginning, that would make sure we have time for questions and things like that. >> Okay. Um let me see. We have we have six people in the audience. Um so I I might because it is because we they have a hard stop. I'm I'm Is it all
right with everyone if I shift the public comments to the back of the meeting or just after the auditor report? I'll put it before the next. The other item um if Sean is ready, we were going to get an update on the school debt exclusion impact on taxes when
we'll see it and an update on the cash flow debt financing of Jones and how we're going to see that in the capital report. Those were the two big items and then just the more general discussion of looking forward is on today's agenda. So
I think we brought in audit. I see um Sean I'm going to turn it over to you so you can introduce >> Okay. And there's one um Nadia do you want us to bring in Scott as well? >> Yeah Scott is here. Uh can you invite him to
>> Yeah. S the S McIntyre and the attendees. Um let's see. I can promote them. Okay. >> Mhm. >> All right. So, um I'll do a quick introduction. So, um our auditors, CBiz,
formerly Markham, formerly Meansen and Heath, um are here to go over the FY24 uh audit report. So, we're, you know, it's a little bit later than we typically do it, but we're going to start catching up. So, this is actually
dated June 30th, 2024. So, you're going to have to kind of think back when we when we look at this. Um, but so it wouldn't be last fiscal year, be the year ending the prior fiscal year. Um, but I'm going to turn it over to I think Scott to open it up.
>> Yes. Thank you, Sean. Uh, good good afternoon, everyone. uh pleased to be here to give you a a walkth through of our audit of your financial statements. I'll tell you a little bit about how the audit went. Uh I'll also walk through uh some of the highlights of your financial
statements and then our single audit report. Uh before I joined um I was able to hear some of the meeting. Um I appreciate I I do have a hard stop but it's like at 3:15 maybe maximum 320. Um,
I can talk for financial statements for hours, but um, I I hopefully that's going to give us enough time. I had to have rotator cuff surgery a couple of weeks ago, and I have a followup today at um, shortly after 3:30. So, that's why I have the hard break. If if we walk
through this, there's still some questions or areas you want me to uh uh address further, um I can reconvene at another time or maybe the questions can all go through Sean and I can provide the committee answers. Um I appreciate
you being able to accommodate me today to to have this conversation and still make my appointment. Sean, I'm going to say a few more words, but will I have the ability to share my screen? Um >> yeah. Yeah, we yeah, we can do that. >> Okay. Thank you. And in just a minute,
I'm going to share share my screen. I think it's important to walk through some of the documents that are the finished product. And I think if I'm sharing my screen as opposed to referencing page numbers, uh that sometimes you may not know if it's a print page or a PDF page, uh it can be a
little more convenient this way. When I first share my screen, I'm going to share what we call our governance letter. Um and that's a term that we in the audit profession use. Um, and it's because it's the communication that our professional standards require us to
report to. This is a phrase that's in the professional standards, those charged with governance. And rather than call it that letter, the audit profession and just in general calls it the governance letter. But these are the things that we, our professional standards require us to communicate with
you. things like you've heard me talk about in the past, how the audit went, were there any significant audit adjustments, what the what the key estimates are, um any disagreements, and how to apply generally accepted accounting principles. All that stuff is
included in what we refer to as as your governance letter. Uh and I'm going to quickly share my screen. And I just talked about a lot of these, so I'm not going to spend a lot of time um on this letter. I'm going to more in just a few minutes. I'll hop into the financial
statements and the single audit report. But um this audit will go final finalized over the next couple couple of days. Uh but this this governance letter uh tells you you know our plan scope and timing that we obtained evidence on a
test basis. It tells you the professional auditing standards that we utilized in order to um conclude on our our our opinions that your financial statements are materially fairly presented in accordance with GAAP or generally accepted accounting
principles. Uh it we do need to tell you that we did identify management override of internal controls as a significant risk. Um I will tell you that in every audit CBiz Markhamm Heath um and every other firm in the
country identifies this as a risk and that's because our professional standards require us to to identify it as a significant risk. So what does that mean? It means we must design specific tests in order to make sure that we have evaluated your risk of o you of uh
management overriding your internal control structure to make sure that there are no significant uh oh pardon me material errors in your in your financial statements. uh and we have done that we we have concluded based on the test work that we have done uh the
specific test work that we have done we have come to the conclusion that management did not override the internal control system that in any way that would have resulted in a material adjustment to your financial statements. Some of the qualitative aspects that you that Amherst employs uh this is where we
talk about estimates. The collectibility of estimates is certainly one. The estimated useful lives of your capital assets and depreciation are certainly estimates as well as the net your net oped liability and your net pension liability and the related accounts that
go along with those the deferred outflows of resources etc. Um you know we we think the disclosures regarding those significant estimates are appropriate under the circumstances. This is one I certainly like to talk about when it's when it when it applies
and it almost always does. It certainly does in Amherst. We encountered no significant difficulties in dealing with management and the performance of of our audit independence. We are independent from from the town. Um our professional standards require us to to not only tell
you, you know, remind you of this, but also tell you that um we did participate in what we call a nonattest service, which is the preparation of your financial statements. Um, technically that's what we call a nonattest service,
not audit related. Um, we do it for Amherst like we do for every other community. We audit in the Commonwealth of Massachusetts. We audit your books and records and from your books and records, we help you prepare, you know, this 80 90 page document. It's it's an
additional service that we do. Uh, uncorrected misstate uh misstatements. We did not need to propose any significant audit entries as a result of our work. Disagreements with management. Uh sometimes there are some there were no significant disagreements with
management on how to apply generally accepted accounting principles during the year. So uh some other things in here uh we did not note any significant or unusual transactions in in your fiscal year 2004. So this governance letter is what I would call a a a clean
letter. It's we're there's no communication in here that says we had a really hard time auditing your cash or anything like that. Um this is the way I think um audit community audit committees and and those charged with governance this is what they would call
a clean governance letter. There's no there's nothing to highlight in here. Um and as I've said a few times o over my career is most places want a relatively boring report from their auditors. um if you're getting a real juicy report, it's
probably not a good thing. So, but enough of that. That's the governance letter. Now, if I'm going to hop over to our to uh your financial statements. Um and I just since I just closed that document, I now I could could maybe the chair or Sean, could you let me know
that you're still seeing the on my screen your your basic financial statements? We're still seeing your ch your screen and to the extent a committee member has a question that or comment they're they will raise their hand. Scott Sean, >> thank you. And if and if you as
>> I'll stop you if I see a hand go up. >> Thank you. Well, the first page everyone turns to in in the audit report is the independent auditor's report. There's nothing really to highlight here because it's nothing different than prior years. same opinion as you've had for the last
many years. Don't know exactly how long, but in our opinion based on the audit work that we did, and I'll also highlight for you, we're referencing the professional standards that we followed, generally accepted government auditing standards as well as generally accepted
auditing standards. We followed both sets of standards as required. Uh, and in our opinion, your financial statements are materially fairly presented in accordance with generally accepted accounting principles here in the United States of America. Fancy way of saying what most people refer to as a
clean audit opinion. There are no modifications. We're not saying that anything deviates from the the norm here. In our opinion, based on our test work, your financial statements are materially fairly presented in accordance with GAAP or generally accepted accounting principles. Now,
following your MDNA, pardon me, following your our independent audits report is your management's discussion and analysis. Um, also just and I will probably likely today refer to it as MDNA, which is just kind of a common way
uh to to refer to it. Um, it's a great resource to go back to at a later point in time to understand why certain key account balances may have changed. I'm actually though going to go directly to your to your basic financial statements uh because there's some account balances
in there that are just worth worthy of discussion and then I think many of the things we'll talk about as we go through the document uh you you can go back to in your MDNA at a later point in time and see the things that we've talked about this afternoon. So I'm starting here on your your
statement of of net netmet position starts on print page 40 and it goes for 14 excuse me and it goes on to uh print page 15. Um if there are I know I feel confident I would have said this in prior meetings with Amherst but if there
are some new committee members um there are essentially two sets of financial statements in your in your in your in the document we've prepared for you just like document we prepare for every government um both in the Commonwealth of Massachusetts and elsewhere. I
generally refer to the page you're looking at right now as the long-term perspective balance sheet. uh long-term perspective because it includes things like your your capital assets, your investment in land and and buildings and and improvements and things like that.
And as I scroll down into page 15, you see the other side of the balance sheet, the liabilities and and net position. In the in the governmental world, it's not called equity, it's called net net position. And you see long-term liabilities in here, your net net uh
pension liability and your net OPED liability. Again, this is the long-term perspective balance sheet. Technically, it's called the statement of net net position. In a minute, we'll look at your general fund balance sheet, which is really thought of as your uh
short-term perspective balance sheet. Now, the really the only thing I want to point out because we think it's part of our no conversation about a local government's financial statements nowadays would be complete without at least talking about your net pension
liability and your net OPE liability. Uh the net pension liability, that is your proportional share of Hampshire County's overall pension liability for your governmental funds. That's this first column of numbers. The middle column of numbers are your enterprise funds. So
for your governmental funds, it's almost $43 million. In total, it's about $47.6 million. Now, a couple of things to point out there is um you know, the the the biggest driving assumption when it
comes to uh yours or anyone else's net pension liability is the discount rate. discount rate, if you're not familiar, is that's the estimated future earnings of the available pension plan assets. Um, in Hampshire County and town of
Amherst is using a discount rate of about 6.88%. That's consistent over the prior year. Um, I know Perak likes to see things. I've heard them say 6.75%, I've heard them say seven. You know,
you're just a hair above that 6.75. No, I our firm does not take issue with a discount rate of of 6.8%. Um, those that are well in excess of 7% uh the auditors have been having a different type of conversation uh with
management and communities and and county systems that are using something well in excess of of of 7%. Now the other uh two of I said there were two key things about your pension liability. The discount rate being one of them and that is the accounting side
of the equation. The funding side of things is very different and I'm not going to get into the the overall difference unless there are specific questions. But you pay your assessment into Hampshire County Retirement System to pay down this liability. It's always important to remember
because obviously the 42 million is a is a significant account balance, but it's important to remember that you're on a funding schedule. Pardon me. The the county retirement system is on a funding schedule. And the mo the latest one that was approved by PAR, the state agent
state oversight agency has your system being fully funded uh in 2032, which isn't it's seven years away. Um, I think that's important for context because yes, the liability is a big number. Um,
but if the funding schedule is set to mature in in in in seven years, obviously assumptions need to materialize, but if the assumptions continue to materialize and you keep doing what you're doing for the next seven years and the system doesn't
extend its timeline, then you're going to bring that liability down to zero. Next up is the net uh OPED liability. OPED being the uh other post-employment benefits. Fancy way of of saying for
retirey health healthcare. Uh it's it's called a net liability because Amherst uh does have a a OPED trust fund. It's a separate page in financial statements. We'll glance at it later on. Um I'm seeing uh Madame Chair,
I'm seeing somebody has a hand up. I don't know if you want >> Sean. Sean, >> sorry, it's me. Sorry to interject. Um, just on the retirement system, just so everyone knows, we do have a representative from Ammerst who sits on the uh as a trustee or on the board of the retirement system. Um, Jen Lefelant,
our treasurer. And, uh, I think an important point is the full funding in 2032. So, not all systems are on track to be fully funded that early. It's a good thing that we're, you know, this liability looks big, but we're paying down a big portion of it every year. Um,
so I think technically we could it could be fully funded up until 20 240, but we're way, you know, towards the earlier end of that spectrum. So, um, well, it's a big number. It's actually a good thing that we're getting pretty close, uh, to fully funding. And then there's going to be sort of these different conversations we're going to have to have with the
retirement system and and throughout the town because once it's fully funded, um, our retirement assessment is going to u go down. Um, and how it goes down is those is the discussion we have to have with the retirement system. But um so big number, but we're actually in a
really strong position with getting it fully funded. >> Thank you. And that that added comment about the assessment going down is is actually I'm I'm glad you brought that up, Sean, because it it it really leads into a point when we talk about the net
op liability uh that I think is just important for for readers and users of your financial statements to understand. And um in the end I'm going to suggest a added sentence or two be brought into your footnotes uh regarding the your your net
OPED liability. OPED as I was saying stands for other post-employment benefits. Fancy way of saying this is deals with retirey healthcare. Um you have an actuarial valuation done um and every other year and you do a report every year to put this liability in your
financial statements. Key things with this uh estimated liabilities uh deal with your also deal uh with the fact that you have a trust. Trust is about 18% funded as of 630 24. Uh that's reasonably well funded. Um I have some
clients that are 80 85%. Um a number of them are around 15 20% where where Amhurst is. Some are around 1% and some don't have a trust. So um that's good news. Good news for Amherst. Now, the other the key thing that that uh goes
into uh you using a sorry, I want I don't think I told you that you're using a discount rate for your OPED liability of 6.97%. For simplification, I'm just going to call that 7% because it's just a slight tick but below 7%. Technically, it's
6.9% but it's but a 7% discount rate. One of the things that's embedded in the accounting standards is you can use a discount rate of that if the trust were to pay benefits and it to never um go into a negative negative
situation. Uh and yours given the current funding schedule is not expected to do that. But one of the things that's in your uh OPED valuation is is sort of a timeline of the contributions that go
into your OPE trust fund. And this is where it ties in with the maturing of the pension liability in 7 years is that one of the key assumptions is that in seven years when as Sean indicated the
assessment from Hampshire County it doesn't go to zero because you have a normal cost. What will go to what will go down significantly is is funding of the past service cost. And one of your assumptions is the town of Amherst taking some or all of those dollars that
have previously every year gone to the retirement liability and putting it towards the OPED trust fund to fully to eventually fully fund the OPED liability. Now, I'm not saying there's anything wrong
with that assumption, but it's assumption that I'm bringing it up here today because I want to make sure everybody in Amherst is is aware of it because it's it's just it's an important assumption because if you don't have that assumption, there's a
good chance that you use a discount rate less than 6.97%. Um, so it's an important assumption. It's one that's not you're not the only client that that CBIS has that has a similar assumption. In fact, there are
several several several clients that do it. Our job is to point out areas that um in addition to auditing your financial statements, we view our job as pointing out things that um we want to make sure you're you're fully aware of
and knowing that this we want those charged with governance to be fully aware of this this assumption. Um, can assumptions change over time? Absolutely. Absolutely. That's where those deferred inflows and deferred outflows of resources comes from. When you change assumptions, the impact of
those get deferred and amortized over approximately five years. >> Sean Sean, if we could just stop for a second because I see councelor Hani, she has a commenter question on what you've just told us about OPE, I think. Correct, Mandy?
>> Yes. Um, it's more of a a a verbal comment to the public listening if they were to look at our um financial indicators statements or the budget where we're putting approximately 8.5 million this year to retirement assessments. And what you just said,
Scott, is that you know at some point in seven years, which I know is not next year, right? But as people hear, oh, it's going to be fully funded. And they'll look at that 8.5 million and say, oh, we'll have that for operations. Say, what what you just said and what the assumption going on for the finance
committee at this point and and the finance director and all is that some of that 8.5 million will stay in that line for retirement assessment, but the other part would not be open for operations because it will be transferred down to the OPED line below
just for the public listening. It's not like we'll suddenly have 8.5 million to add to our operations given the assumptions we're making. >> So Mandy, I just want to add to include a question at the end. Does it mean that
all of it so that 8 million goes from one line to another line? And maybe Sean can be, you know, or are we saying a big chunk of it will still be needed for OPED? >> Is it okay if I answer that Kathy? >> Yeah. >> Um, so it's not all of it. it's, you know, it's maybe a few million dollars.
Um, but we can we can look at that on its own at some point when when we get the funding schedules from Hampshire County. They give us a breakdown of sort of what's the normal cost that we have to make every year just as for employees that are working now. And as Scott said, how much is sort of making up past
liabilities and it's that making up past liabilities piece that would um we would no longer have to pay to the retirement system. As Scott said, there's a lot of assumptions over the next seven years if there's a market decline that would uh impact it. If um something happens where
people live longer or anything like that, like there's a lot of assumptions just like we have an actuarial analysis for OPED, they have that same analysis for the retirement system. Um and sometimes we actually use the same actuary. So, um so, but theoretically some of that could at some point free up in the 2030s and we a couple years ago
actually did an analysis. We worked with our actuary to model what would it look like if we shifted all of the savings towards OPED? What would it look like if we shifted half of the savings to OPED? So, we ran some different options. Um, and I can't remember if we reviewed that with the finance committee back then or
not, but we could dust that off at some point. Um, and look at that and it kind of shows like how many years would it take us to fully fund OPED based on how much we shift towards OPED. Um, but again, the good news is we're we're sending that a little bit towards OPED every year. not anywhere near where we
need to be in order to um you know fund it anytime soon, but we do have this possible you know funding on the horizon that could be shifted to help us fully fund that as well. >> Thank you. >> Thanks.
>> As you may be able to tell, I could probably talk about pension and OPED for hours, but I usually touch s touch on the surface about them and take questions. Um, I'd like to move on onto what I we would refer to as the second set of financial statements in here. Uh,
this is your balance sheet for your governmental funds. If the opinion is the first place, the auditor's opinion is the first place that most readers turn to. This is the second page. They don't look at the MDNA and most don't even look at pension and OPED. They come right to
your governmental funds balance sheet and they look in the first column of numbers, your general fund, and they look down here in the bottom third and almost in more specifically the third number up from the bottom, your unassigned fund balance with a June 30,
2024 balance of $23.6 million. Uh that's really the first place that almost all readers are going to turn. It's important for me to remind uh the the committee and anyone else that might be listening, there's really two
components to your 20 $23.6 million. Amherst, like every other community in the Commonwealth, has its general fund and you also have a stabilization fund. Um Amherst accounts for stabilization fund completely separate from the
general fund again just like every other community in the state. However, for formal reporting purposes, they are essentially one and the same. So, your $23.6 million is really made up of two things. Your unassigned fund balance in
your actual general fund of 13.6 and your general stabilization. The word general in that comment is important. And your general stabilization as of the year end here was 9.9 million. So, there's two components that make up that
23.6 million. your unassigned fund balance in your general fund which is the starting point for the do certifying your free cash plus in your case almost $9.9 million in general stabilization. I say general because what we what we mean
by that is there's no particular expenditure purpose associated with with the money. It's set aside for you know future budget use and nothing in particular up here in your committed uh fund balance of 8.1 $8.2 $2 million. You
have two specific stabilization accounts. Um it would have to go to the back. I believe it's a capital and a uh reparation stabilization fund. But because there is a specific expenditure purpose associated with that
stabilization fund, it's committed. Those dollars are committed for that purpose. There's no expenditure purpose with your general stabilization, which is why it's shown as unassigned fund balance. Um, really quickly, other things on your governmental funds
balance sheet. Once again, 63024, you have a major fund for your ARPA. Uh, the cash and investments that you have is completely offset by this revenue. Pardon me, this un unearned revenue, which is a liability. Um, all that means is you've you've received
like everybody else, you receive the upper money up front. When you spend it, then you have the ability to recognize the revenue. Accounting principles don't allow you to recognize it as revenue until you do with it what you said you were going to do with it, which is all
those purposes that you can spend the money on. So when you spend it, there's an actual recognition of revenue and the expenditure. That's why fund balance or or net or equity is zero because anytime you spend it, you recognize the revenue.
So, it's always a net zero to the income statement, if you will. A couple of other major funds are your town's capital project fund and your borrowing funds. Um, normal capital project activity for for Amherst um as well as many other communities in in the common.
Um, you know what? I'm sorry. I didn't I I meant to talk for another minute about your unassigned fund balance in the in the general fund. Collectively, those two pieces that that make that up uh represent about 28% of your general fund expenditures. It's a strong balance
sheet. >> And where do we see those two that make up that balance? >> The the two that make that up are your general stabilization account and your general fund unassigned fund balance. They make up the 23.6.
And collectively that 23.6 6 uh is equal to about 28% of your general fund expenditures. >> Okay. Is that denoted in this report somewhere? >> It is. It's in the MDNA. >> Awesome. >> That's why I said it's a it's a great resource to go back to at a at a late
later point in time. >> Um it's a strong balance sheet. It's a strong balance sheet. A year ago, this number here was 20.3 in represented. I'm sorry I don't have the percentage on my notes. It is
in your MDNA though. Uh so you can go go look at that. So um jumping forward, I want to talk about your enterprise funds for a minute. Um I'm always careful what I how I say this. Um so it may seem like I'm I'm being overly careful here, but I
I talk about this a lot with with clients. You're you have um I'm only going to really talk about the major major enterprise funds, your sewer and water. And what I typically tell clients and when I've done some public speaking in in this is I'm not telling you the
balance sheet or this technically it's called a statement of net position. I'm not telling you to ignore it. I'm not telling you to ignore it. Um likewise on your statement of revenues and expenditures, I'm not telling you to ignore that one either.
But what I am telling you is jump right to the cash flow statement because this has the information that most readers want to know. And when I say most readers, I'm referring to credit rating agencies and fi financial institutions. And go back to the balance sheet for a
minute. You know, you've got, you know, a net op asset here. You got these deferred outflows of resources here. You've got uh bonds payable. You've got net pension liability. you get deferred outflows, resources. Most readers don't understand all that
stuff. I'm just being very blunt. I've been doing this a a long time. What people understand is is are the enterprise funds are they generating ca enough cash for operations and to cover the principle and interest on your long-term debt. So again, I'm not saying
the balance sheets unimportant. I'm not saying the statement of revenues and expenditures is unimportant, but go to the statement of cash flows. It's where all the good stuff is. As I say, you want to look at this this row right here. Net cash provided by operations. Okay?
And you want to know that that covers the principle on your long-term debt and the interest on your long-term debt. And if you look here in the sewer fund, the principal on your bonds, not your notes, but bonds, 453,000, the interest, and that includes interest
on bonds and notes. But you collectively you put those two cash dispersements for principal and interest out there. Your net cash provided by operations covers the principal and interest on your long-term debt. You're making enough generating enough cash to cover
operations. you you're issuing debt to find you're issuing debt because you see proceeds of notes, proceeds of bonds, and you're putting three quarters of a million dollars uh back into the investment of the infrastructure of the sewer plant and the water plant.
Does the net cash provided by operations does it cover principle and interest on long-term debt? That is, in my professional opinion, the best way to judge your enterprise funds. There's too many too many accounts on the balance
sheet to make it in my opinion meaningful. I'm not saying don't go look at it, but this is where the this is where it comes back to basics if if if you will. So, >> and we're not we're not considering here principal payments on notes.
>> No, we're not. Uh because the principal notes it get gets paid and then it gets uh sold as a long-term debt. So sold to one inst institution, it may be refinanced at at another. So there can be some cash flow for that, but it's really the equivalent of it being rolled
from a short-term note into a long-term note. >> Okay. Thank you. >> And you know that that's a really good question because a long time ago, yours truly combined these two rows
right here. And this is where I learned because I had Moody's call me and say, "What's going on here? Something doesn't make sense." And that was very educational for me. And I probably wouldn't articulate it this way to you unless
Moody's had called and I had had a one-on-one conversation about this particular client. So, it's a really good question. And it's why the credit goes to Nad Zer. I may do the talking here, but Nadia helped put this together. That is why she segregated them out so the reader Moody's would
know would would see the distinction. >> Thanks for pointing that out. I appreciate that. >> Okay, I'm going to go over two a couple more pages to uh Amherst OPED trust fund. Um, I usually go to the statement
of revenues and expenditures uh rather than the balance sheet because this what what this tells you is you have $14 million uh in your uh trust fund that is restricted for OPED benefits. Important to know.
The other thing to point out is the the contributions of $4.6 $6 million and the expenditures or the deductions they're technically called of $3.8 million. That $3.8 million is an estimate from
your actuary. We agree with the estimate, but it's an estimate from your actuary that represents what the what is known as the implicit cost is. uh it's not an actual cash dispersement that that you're making out of your trust fund, but it's the actual cost to having
retirees, those that aren't working anymore on your existing health care plan as they are permitted permitted to do. I point that out so you have the proper what I think you would have the proper context in comparing it to this number here. Amherst is not making a
cash contribution of $4.6 million. you're making a cash contribution of the difference between these these two numbers about $800,000 is what you're doing for a cash contribution, but implicitly you fund that implicit subsidy. So
that's why these two numbers are as high as they are. But the net between them is what I think you should look at and to know what you're contributing cash to this trust fund above and beyond the pay as you go method. and the pay as you go
is the 3.8 as both an expenditure and as as as a revenue. That's just a wash. The difference is what you're actually doing in cash. So, um other things in the report to to note,
uh I'm going to jump over the footnotes. There's a wealth of information in there, all the detailed assumptions that that go on. But I want to take you to your general fund budget versus actual page right here. The focus
on this and quite honestly a lot of people after they look at the unassigned fund balance in your general fund, the next place they turn to is here. um N people like Ned Zer and I appreciate it when people will look at the enterprise funds and look at the footnotes and what
have you, but this note there's no doubt uh this is probably the second most viewed page uh in in this report. What this tells you is that for fiscal year 2024 revenues came in $4.3 million greater than anticipated. Um we've seen
that a lot in fiscal year 24 driven by a couple of things. Continued strong uh motor vehicle excise collections and strong strong investment earnings uh comp compared to pay compared to budget. On the expenditure side of the equation
again the focus is on this last column of numbers the positive in your in your case the positive variances budget and actual. um $2.1 million in unspent approp unspent and unencumbered appropriations. A year ago that was $3
million. Still $2 million on a on a budget of 8586 million is a is a is a good turnback. And I think it shows cons both on the revenue side and the expenditure side shows conservative budgeting practices. You know, I would note that a year ago this number was
260,000. Now it's just under 60,000. And the the big one was in the prior year you had unspent and unencumbered debt service uh appropriation of about a million dollars. So there probably was a timing issue that that that occurred in there in the prior year.
Now the last thing I want to point out on here and this this goes to um un making sure readers understand the fi financial statements. Um I want to point out some of the text over here. The use of free cash. free cash. I'm sure the
committee is aware is it's it's a Massachusetts thing. Uh this the Department of Revenue certifies your free cash and then then it's free to be appropriated by the the appropriating body. Um now again has done a nice job
here in outlining the purpose of which you used free cash for and we think that's important because we think that's what most readers want to know. Um, again, I feel like I'm telling the story of Moody's calling me. I had a client once when I just when I prepared the
financial statements, I said they used free cash of $5 million. Well, it gave the reader the impression that they used it for operations. And in their case, they used it for capital and oped purposes, which is which is kind of
like Amherst. If you look at the $4.5 million, the combined $4.5 million that you've used, you put three and a $3.3 million into stabilization. You transferred $200,000 to a special revenue fund. I forget what that that is, but it's not particularly important.
And then you put a million dollars into your capital budget. What you don't see here is the use of free cash for operating purposes. I think those are wise decisions that are being be being made because if you use it for operations one year, you got to make sure it's regenerated. And here you're
putting the vast majority of your certified, pardon me, your appropriation of certified free cash is going into a stabilization fund. Real smart uh use of use of reserves and not using them for uh not using one-time revenues, if you will, for recurring operating
expenditures. Now lastly I want to point out um another report over here is our single what we refer to as our single audit report. There are essentially two reports in here as outlined in the table of contents here. One is required by
government auditing standards. It's our report on internal controls and we say government auditing standards. Remember when we looked at your pardon me our opinion on the financial statements I said were two sets of auditing standards that we followed. One is government auditing standards. This set of audit
standards requires us to give you a formal report that essentially outlines if our work disclosed any significant deficiencies or material weaknesses in your internal control structure. We're going to look at the report, but the good news is based on our audit and the
standards that we follow, we did not identify any significant deficiencies or material weaknesses. The second report that we are required to uh issue to you folks is in is in accordance with uniform guidance. That's a fancy way of saying as a recipient of
federal money and and spending of federal money uh the feds have an audit programs that we need to follow to make sure your internal control structure is sound over your administration of federal grants and what you spent that money on is consistent with the purposes
of which that grant is is is made. So, as we as we dive into some of the the detail here, uh the first report again is based on governing auditing standards, I'm going to skip real quickly over this stuff, but it gives you the definition of things like a material weakness and significant
deficiency. Let's just say uh we'd be having a longer conversation if there were significant deficiencies or material weaknesses. But you can tell in here uh you know we did not uh we did not we did not find and I'm not reading
it exactly but it says we did not identify any significant deficiencies or m material weaknesses. Um again the uh uniform guidance report same type of thing here. If we found def deficiencies in your administration of federal grants
they would be included in here as well as um what that finding was. I'll go to what I call well I'm going to skip over your CIFF or schedule of expenditures and federal awards. There's a summary page associated with this document and quite honestly I think the feds like to see it all on one one piece of paper
here. That's my own opinion. Our opinion in your financial statements is unmodified. Clean opinion. Did we identify any significant deficiencies or material weaknesses? No, we did not. Any issues of non-compliance? No. federal awards, any material weaknesses,
significant deficiencies, no. Any other findings? No. And it tells you the two programs, and it's not always two. It's a it's it's it's we have to get a certain amount of coverage. Uh we go through a risk assessment, and we evaluate which federal programs need to
be tested in accordance with the with a matrix that's put out by the federal government. And for fiscal year 2024, uh we were required to test or we selected uh state the fiscal recovery funds, the opera money for most of our clients that was selected in fiscal year
24 as you can well imagine in the drinking water state revolving uh loan. Um that again is a very common program that we we test. Those are the two programs we tested. I want you to know that this report exists. Um it's referenced in our financial statement
opinion. So, it's important to see both together. It's part of the package, if you will. Um, and Ned Zale later this week once this all gets finalized and what have you, we'll upload these reports to what are known as the federal audit clearing house so that the feds
can then review our our work and know that uh Amherst complied in all material respects with uh a sound internal control structure um in general and over the administration of f federal grants. with that. That is a, believe it or not,
I count that as a fairly quick walkthrough of the financial statements. There's so much going on in there. I probably went maybe longer than some committee members had hoped. I apologize for that. There's so much in there um that I just think is worth talking about. Um, so I hope I didn't go go too
long, folks. But I will try to answer any questions, any other questions that you may have. >> Thank you, Sean. And I'll open up for questions or comments. And um uh I'm going to wait for hands to go up because I have a few. Bob, go ahead.
>> Uh you should all also just note that Tom has joined us. >> Oh, thank you. Yeah, Tom. So, just let us make sure we can hear you. Yeah, >> I can hear you. I hope you can hear me. >> You You are loud and clear. Thanks. So,
so my my biggest concern is the future of OPED when we've seen a lot of inflation in health insurance and in, you know, prescription drug coverage. I mean, we're looking, my wife and I are
looking at right now at at at Social Security, and it's it's hitting it's going to hit us uh as well. So, what if if those blow up, so to speak, um if they get out of control, um what's the
impact on our being able to sort of pay off the OPED liabilities, you know, over time? >> Um, I can answer that. I'm going to very quickly show you something that's deep
in the disclosures here. Um, so I'll share my screen one more in in a second. I'm just getting to the page that will help me answer your question. And what when I get there, what I'm going to share is what is known as a
sensitivity analysis. Um, >> I think I'm back sharing a screen. >> Yep. Yes, you are. >> This this is uh the sensit there's two s two parts to this. Um this is your OPED
liability $64.5 million. Mhm. >> Now, I'm going to address your question in a minute, but because I spoke earlier about the fact that you're using a 6.97% rate, uh, and that is driven at least in
part because you're of the future expect you're in 2032, you're going to transfer some fund retirement funding in here. This tells you that if you had a 5.97% rate, you wouldn't have a $64 million
liability. You'd have a 74 almost $75 million liability. Okay. Now, to address your question, the healthc care trend rate that the actuary used is consistent with most most clients is 6%.
Um, this sensitivity analysis tells you that if it jumped up to 7%, it would go to $76 million. And just as importantly, your actuarily determined contribution
to go into the fund to keep it being scheduled to be fully funded would have to increase. >> Okay. I think. But tell me if I hope I answered your question. >> You did answer my question. Thank you.
>> But Bob, I just want to maybe Sean's going to say this already. I was going to ask about OPED. OPED unlike our health insurance um for the uh non-retirees. OPE is paying and Sean should correct me
both Sean's but it's paying a co-ayment on Medicare. It's paying a premium and it's paying drugs. So it's not seeing it's not seeing all of hospital all of doctor you know because otherwise six 6% is way lower than anything we're seeing
on trends and health insurance. So am I right? Is that why >> Kathy can I say two things? >> Yeah. So that was my question of what's why such a big difference. Yeah. one I just want to clarify um Scott from Scott just so you know two Shawns is too many
right and and the um the other thing to remember so that trend that's over I don't know Scott if you remember but that's over like 30 years so you know you're looking at this year and obviously we've all seen double digit health insurance increases but when they
look at that they forecast you know might might be more than 30 years into the future and and factor in what they think healthare care cost inflation will look like. Um, and so, uh, Kathy, I'm not, you know, I think we'll have a separate presentation with
the actuary on OPED at some point in the future. Um, and we can dig into like what components and Scott may have more insight into this, like what what are the specific components, but I think it does look at sort of all medical costs, um, and what they anticipate it'll rise over the long term. So even the you know
the 6% is I feel like higher than it has historically been and I think that probably reflects that healthcare costs have been going up. I remember I want to say five six years ago you know it was in the four or 5% range when I used to look at those. So the fact that it's 6% long term it is pretty high already. Um but I know it feels like it could go
higher based on what we've seen. >> You know and I know at one point when people were looking at current if we stayed at current it would be 100% of GDP. So people think we can't quite get there, you know, in terms of, you know, that so there's this assumption that
something will hap something will happen out there when you go super long term. I is what I think you're saying, Sean, you know. Yeah. >> Yeah. No, I've heard that from actuators too that that they when they look out like it can't possibly increase at 10% every year for the next 30 years or no
one will have any money left, right? So there will have to be some cost uh controls put in place to uh control that. So I had a a a separate question on the other you know you noted when you went
through or on our revenue side and you're looking at FY 20 uh 24 and you're soon or you started to look at 25 is is it you I think you said it's been common in other municipalities that excise
revenues and interest revenues were higher than forecast. Do it. Is everyone seeing that? And is there a reason why that's happening, you know, over, you know, because ours have been distinctly higher and I just want to know how much of it's a shared
experience. Is that a recovery from COVID that people are buying new cars and excise taxes came in higher and we were conservative. So, it's it's an observation as you look across different towns. >> It it's just that it's an it's an observation. Um, you know, I I mentioned
that I think Amherst historically is budgeted conservatively. Um, I'm very happy to be able to say that the vast majority of our clients actually budget conservatively. So, that too contributes to to the favorable, you
know, e excise size revenues. Um I do think new auto sales have been remained very strong over the past couple of years which has led to that. So and interest rates have certainly been substantially better than I don't
know 22 something like that. >> I see both Mandy and Sean. I was just going to quickly say related to that um as cars get more expensive we'll also see excise right because it's based on so many thousands per value and
we've seen car prices um get more expensive since co and you know I hear they're the average you know I think I just read the average car value is like over $30,000 now which is you know a new you know higher than it's been historically so that's another thing that we'll have to adjust our budgeting
as we look at you know how we budget motor vehicle excise tax in particular because you know if we see that trend going higher and it's tied to the value of vehicles you know we'll make the adjustments. >> Well that that was my question Sean that you can see what's happening underneath it. So we cons conservative versus just wrong when
you could have known you you could have made an adjustment. >> Yeah that that leads into sort of my question. Um welcome back Sean. I haven't spoken much, but um um I don't know how much you heard about last budget season, Kathy and I and the finance committee really pushed for a
little bit less conservative, but still conservative revenue forecasting. Um and and so, you know, Scott, as you were going through this this budget and actual and I know this is like a year two almost a year plus ago, so this is
not the one we haven't seen the one that ended June of this year. Um but we have struggled with what is a logical sort of you know 4 million um
above a $4 million variance on $88 million revenue estimates and a $2 million variance on an $86 million expenditure estimate. Um, and you said that's sort of well within the
expectations as as an auditor. What sort of are the expectations you're looking for in sort of those variances um for um responsible budgeting practices? And I don't know if I'm wording this question right. So, if we
had an expected revenue of $100 million and you saw a variance of, you know, $100,000, what would your comment be? you know, like where where would you be comfortable with on those variances on both ends, on the revenue side and the expenditure side?
>> Well, this will probably sound like a a canned answer. Um, and it's just probably me being cautious, meaning we've been asked to audit the basic financial statements and we've done
that. And I probably would get myself into trouble if I said it's 100 grand here, 100 grand there. I those things I've been around for almost 40 years. They come back to bite me when I quantify things like that. What I do
typically point out is if there's a negative and I I won't take them if if we we need to I can share my screen again, but if there's a negative in the variance column on the revenue side,
what I look at is I don't really look at the actual my my eyes don't go to the actual first. It goes to how much did the budget go up over the prior year? Because a lot of times revenues are pretty consistent and if there's all of a sudden a year in which something's
negative, is it because the budget went up by a substantial amount? So, I I I share that. Look, I know I'm not specifically answering your your question. It's just not something auditors should dive into. Um, but I'm
trying to share some element of what an auditor looks at who's been doing this a long time. It's not all about the actual to actual. Sometimes you got to go look at the budget to budget. Those are where negative variances usually originate
from. >> Thank you. >> Other other questions or comments? So, I I noted I just have a a general one, Sean. I noted this is marked draft. Um, it's actually a draft that seems to
have been on a desk somewhere for a while, you know, in terms of when it was. >> Yeah, it has to be dated June. So, the report has to be dated the end of the fiscal year. So, the June 30th, 2024 is just the end of FY24. >> Yeah, there's just this red stamp up in the corner that keeps saying, you know, it's was finished in October 2024. You
know, way >> I think it's 25 or maybe I'm looking. Yeah. and 2125. >> Okay. So my my question is if I don't think I saw any but are are we recommending approval acceptant of the
draft? Is this final? And you know are are you still looking for are there small typos somewhere not in the tables but in the text? >> Yeah, there's been we've sent a few little questions nothing um super material. Um, one thing I have to get Scott is just subsequent events which we
have done some borrowing um, in FY25. They, you know, I'm sure CBS to an extent is aware of some of the borrowing we've done. Um, but I want to make sure that they have the, you know, the additional borrowings we've done for like Fort River, for example. Um, so there's a little bit there, but other than that, I don't suspect it'll change these numbers much, but there might be
some additional disclosures um, related to that. >> If I if I may, um, we do want to add a a sentence. Maybe it's two sentences in the notes. The OPED actuarial assumptions. Um I just want to make this
the statement that uh a key funding assumption is that in 2032 you'll start putting X number of dollars in uh an annually and that's all already spelled out in your OPED valuation. So I will use the numbers that are in there.
>> Andy? Yeah, it was more of a comment than a question. Um, there was something that you said, Scott, that I've picked up on and uh have been thinking about since you said it. And that is that uh
when you were talking about free cash and that you were looking not just at um how what free cash was but how it was used and that um you don't um
look um as a solid planning mechanism using it for operations and um I just want I I just want A note for anyone who's listening to this meeting otherwise that there's been a
lot of concern in this community and in other communities too, other municipalities about cost increases that have come about um in operations that have been
greater than revenue increases over the past um year or two. in particular, more than I've seen in quite a while. Um, and uh it has created this conversation that
is going on in the community about using free cash more for operations. So, uh um the comment that you made I think is something that we all need to um remember after this meeting. So, that
was my comment. Thank you, Randy. So, Sean, I just need guidance on um are we recommending acceptance of this? What action do we need to take today um in
the finance committee? >> Yeah, Paul, I don't know if you're here. I don't know if you have to vote to accept. You could if you want. Um I think this is, you know, we wanted to make sure we shared the report with you and get any of your questions answered. Um, I can't recall if we historically
have voted to accept it or not. Um, but if you want to, you can. If you want to wait till it's final, you know, completely final, I can bring it back at a future meeting as well. Um, uh, Scott would probably not be there at that point, but you could, you know, you'd be voting on the final version. >> I mean, you could acknowledge receipt of
it. Acceptance means that you agree with everything in it. That I'm not sure if that's what the council has done in the past, >> right? Thank you, >> Kathy. There's no council action required for the report. finance committee usually just reports on their review of the um the audit. There's no
there's no recommendation that comes out. >> Thanks, Athena. That's what I was looking for that. So, we're we're acknowledging so at some point when we write a a general report, we'll say we received it and it's on file. >> And it will it will be posted on the
website as well. >> Great. And then Mandy, I just have one more. is this the audit of the year that closes June 2025. Um are we going to be seeing that before December? You know, just on a are we
going to be seeing that also or what's the timing on that one? >> No, you So, um so that will probably be if we start to catch up I imagine a spring early summer. Um, some of it's us. We have to, you know, finish some
things and get it submitted to, uh, CBiz in order to for them to do their audit. CBiz also has a busy schedule as well, so they need to have time to actually dedicate the staff to it. So, um, sort of a combination, but right now we're still in the phase, I believe, of getting CBIZ all the information that we
need to. So, um, I wouldn't expect Well, I think we want to slowly get this back into an earlier cycle. So, you know, our goal, I think, would be before summer, try to have the FY25 come back to the committee if possible. >> Okay. Um, Mandy.
>> Yeah. Um, our audit review was done, I don't know, sometime in like April or May of 2024 for the 2023 season. So, it's typically a spring review. >> So, so that so I think that's what we're aiming for. again. Um, when we do the
report, Kathy, all I wanted to say was I I think it's important to highlight that the auditors that it was basically a, as he said, a clean audit. Um, >> you know, that's all I'd say. >> No, I I think that and you know, especially the the checklist at the end,
it was clean all the way through with no the the level of risk was low and when explored, those weren't big concerns. I do think the um a note about OPED and the tradeoff with pensions is also worth
you know in a long-term view on as it affects our flows over the years. Um, so I thought those two were notable to note and that people can see that now that this note is being added to the report. I think it's a good note to add that
it's being acknowledged in the report as well, you know, on a if we look out multiple years. Anything else on this report? And I have to say, Scott, I just I just thought you did a thorough and succinct review
and I really appreciate that. Thank you. >> You know, I both the report but also the way of presenting it. We all got it last week, so we you we did have a chance to look at it, but thank you very much. >> Yeah, Scott, good job and good luck with your shoulder.
>> Thank you. >> And and I'm going to pronounce her name more. Nadia, is that how would I say her name? Thank you because I understand you're a team that has brought this report to us. So, I want to thank you both very much. Yeah.
And I think if we have no other questions, you can go back to the rest of your lives. >> Thank you very much for your time this afternoon. Have a great rest of the meeting. >> Take care. >> Thank you. Have a good day. >> Oh, and we got him out here out in
plenty of time. So now um the the second item on the agenda was this update on school debt. >> We were going to do public comment. Sorry. >> So I want to just say should we do public comments at this point? Yes. So
um I will if everyone is okay with that. I will open us for public comments right now. And anyone who has a public comment please raise their hand. I'm not
I'm okay. Here we go. Okay, Deb, I believe I've brought you in. >> Hi, Kathy. I sent an email, but I thought I would just say it um here because it's on my mind that it'd be great to have this in the packet. It's there's there's no agenda. there's no um
draft report in the packet and and hearing that you got it last week would would have been helpful to to have ahead of this meeting for the rest of us. >> Thank you. >> Thank you, Deb. >> Thanks.
>> Any other comments? So see seeing none um you know uh one of the other items on the agenda is minutes and I think as people noticed there are no minutes in the packet. I I think there was just a miscommunication on
getting the agenda in and getting this posted. We will get better at it now that we're back to full finance staff. But there no minutes to review either. Just so people know, there no new minutes to review in our packet and I haven't seen any. So we still have a lot
of minutes to post that have been reviewed, but those haven't been posted yet. So I will do that um aside from this time. So Sean, I'm turning it back over to you for the two other items we posted on the agenda. Although it's, you
know, it's listed in the wording, it's just not in the packet. Yeah. >> Yeah. So, almost back to full finance staff. Not quite back to full finance staff. We got still have a comproller position uh to fill that we're we're hopeful to fill soon. Um so, I was going
to give an update on the Fort River project and the library project. I apologize. It's going to be a sort of a highlevel update for now. Um with the goal of bringing back more detailed information at a future meeting. Um, I am meeting with our financial adviserss, Uni Bank, tomorrow, and that's where
we'll get more into the weis and get caught up on exactly kind of where we're at with all the borrowing, but I did have a preliminary discussion with them. Um, so I'm going to give you some background and if you've already know all this or if you have this background, you can just, you know, push me along.
Um but when we do these big capital projects, we finance them through um a combination of bond anticipation notes, which are sort of our short-term borrowing uh instruments. We do that for a period of time until we determine that it's time to do a permanent long-term
bond. Um and then we we'll go out and we'll issue that bond. Um the timing of when we, you know, convert from a ban to a bond can be influenced by a couple different things. One could be interest rates. Um, bands are short-term interest rates, bonds are long-term interest
rates, and as you probably have read about a lot in the last couple years and looking forward, um, you know, the future of what interest rates are going to do are very kind of mixed. So, like when the Fed discusses lowering their rate, um, that really impacts the ban
rate, the short-term rate. So, if they're talking about doing a rate reduction, that might help save us some short-term interest cost. the longer term rates on bonds, which is really where most of the interest is paid, um is really more influenced by like the e expectations around the economy moving
forward. So, um so when you hear Fed reducing rates, don't necessarily think that might impact our bond rates. It could impact our ban rates when we go out. Um so, that's one thing we look at is like, you know, the timing of rate reductions and what might, you know,
maximize value for the city, what might reduce uh that interest cost. That's sort of our overall goal is to minimize interest costs for these projects to the extent we can, but there's always risk associated with it because you might think rates are going down and you hold out and then rates go up, right? And we've seen that in the past where rates
have really bounced around. So, um, so with the Fort River project, um, we have a couple bonds. We have, and you know, I might be off a little bit here, but we have about a $12 million bond and we
have a $14 million bond, give or take. So, those are permanent borrowings for that project. And then we also and as uh as of May 31st of 2025, we also took out a $13.6 million ban. So, all set in uh
all combined between all those sources, we have about 39.6 um million in debt for that project. The good news is we're not going to really need to borrow much more for that project. That's sort of enough to get us through with the MSBA reimbursements
coming in. Um with the the free cash that was appropriated um with possible tax credits coming back to us at the end of the project. Um we shouldn't need to go out to borrow uh for a while for that project. We might have to roll over that 13.6. That's a ban at some point. We
have to we'll roll that over annually because that's a um expires each year. Um, but the the next time we might have to go out for a permanent borrowing would be near the end of the project. So, that's good news. We And the reason I say it's good news is that allows us
to um get a more accurate projection of what the debt service will look like once it's in a bond. It sort of sets the interest rate. It sets the debt payments. Um, and so it allows us to get a more accurate projection of what that debt exclusion payment will look like. Um, again, there's still some variability because we do have a ban and
the timing of MSBA payments and things like that, but because we have those two bonds in place and that's for a significant portion of the project, um, those payments are locked in and we started making payments. So, one of the questions was, um, when will we see the debt exclusion hit the the tax uh, when
will people feel that on their tax bills? Um, and based on what I looked at, you already have a little bit. So there was a small amount of debt exclusion that hit an in FY25 um a bigger portion um so it was about
700,000 a little less than 700,000 in FY25 and that's projected to go up to about 2.1 million uh in FY26 and it will ramp up a little bit each year until FY29 and then it'll flatten out. it'll drop a
little bit and then flatten out um once the project's complete for the remainder of the the debt service. Um so the good news and I'm sure this was done intentionally that sort of lines up with what we told people in terms of how the debt would escalate when sort of the peak of the debt exclusion would hit.
Um, and again, very preliminary analysis. You know, based on the additional MSBA reimbursement that we've received, um, costs being favorable, it does look like that debt exclusion is going to be lower than what was originally originally forecasted, um, in terms of the impact on tax bills. So,
that's good news. Um, I'll get more detail to exactly what that looks like again once I've had time to dig in. But um looking at how much we're borrowing, what those debt payments look like um it's lower than what we were projecting initially um because of some those favorable developments. So um so that's
sort of what I have on the Fort River project right now. Any questions on that project? >> Mostly maturity on the 12 and 14 million bonds we have. >> Uh hold on, let me look right now. >> If you don't have it off hand, don't don't worry about it.
>> Yeah. No. Um, >> it looks like they go out they're it looks like they're 30 years. Um, so they're Yeah, when I'm looking at the again, I'll get you the exact on each of these and how long they go out and what what what their each uh specific debt payment is. Um, but it looks like
they're going out to the 2050s. So, that would put them at 30 years. >> Good enough. Thank you. >> And I think I think this report we just had, Joe, on the the audit had one of them with that 30 years. I just I just was looking at picked up one of them for
the >> Yeah, that's pretty typical. Yep. Um, any other Kathy? >> Yeah, I have a just a a question in terms of what the taxpayers are going to see. Are we when your tax bills we're on the
estimated first half, then we'll get the final second half of FY26. Will there be a line in the bill that explains to people that X amount is the debt exclusion? So, my understanding there isn't currently. Um, we're going to look
and see if that's possible. I don't know if it is within our accounting system. I'm going to talk to some other towns, too, that have had debt exclusions to see what they have. Um, but my understanding is this most recent year that wasn't the case. So, um, I know that would be nice for people to see what portion of their tax bill is
relational and important for people to see what portion of their tax bill is related to the debt exclusion. So, um, I'm going to look into that and see if that's something we can do. and I can report back to the committee if it's doable. >> And you know, if if it can't be put in the regular bill, if it can be put in a
cover note or something, you know, on a >> So then I had a separate question and this is just for people who aren't staring at the costs as they've come in and where we are in the building. We're we're we're right now coming in under
the budget that we had agreed to with MSBA. We don't know until it closes out where we will be, but we don't we won't be borrowing for that. I ask it as a question, Sean. There's a contingency that we may not spend most of it and
we're kind of reserving it, but we won't be borrowing for that until we close it out, you know, and how do how do we schedule that? And we're not going to actually spend the full 98 million of the building costs because >> Yeah. Yeah. So, um, so they'll be
conservative. You know, we get cash flow projections from the OPM and that's sort of how we model out when we need to borrow and what we've borrowed so far. Um, so I haven't gotten to that level to look at the most recent cash flow. Did that assume spending that contingency or did it assume not spending that
contingency or some portion of that contingency? I think generally they're going to lean to the conservative side. Um, and then if we don't have to spend it and we can, you know, pay back uh some of it early, then we would. Um, but I'll that's something I'll be digging into, >> you know. So, Paul, I know there was
MSBA asked us at one point, what are we going to do with it? We're going to say we said we'll hold it, but we're, you know, as a contingency. Um, it was a similar question, you know, so it's it's a savings off the original estimate, but it's not it's not like money, right? >> It means we don't have to borrow that
money. So, that's a separate good news. And just so everyone knows, the the estimator that was put up when we the town voted on it was before MSBA gave us another $10 million toward the school. So we we know that we were on the higher
the high end of the side of an estimate of what this was going to cost rather than low, which is good. You know, it the news will be better than we originally said, but that hasn't been adjusted for all sorts of good reasons. you know, on the put your house in and
see what your bill will be. So, thank you. >> Um, do you want me to transition to the library project? Okay. Um, so the library project, we currently have a ban for 2.8 million. So, we have a bond
anticipation over 2.8 million. Um, we've received MBLC grants totaling about 8.3 million and we have about 4.1 4.2 to in contributions from the library. So based on those funding sources
um and the cash flow that we received from the OPM for that project, it looks like we're going to have to go out for another borrowing in December of 2025 and borrow because we're at that point we will have exhausted all the MBLC funds. we will exhausted all the
contribu the library contributions and we'll need to get the ban in order to continue to be able to pay the bills. Um so we would go out for a ban in um December. It's likely that ban will be a very short-term ban because that original 2.8 that I said we already have
borrowed that expires in March. So it's we borrowed that last March, it expires this March. So, we'll probably go out in December, borrow what we need, have it expire in March so that we can go out for just one new ban that kind of combines the two going forward and that'll be easier to track. Um, at that
point, we're also going to have to decide whether we bond for some of the project in March or if we continue to do a ban. um we you know some of the things we're talking about tomorrow is what would be the benefits of bonding for the town share at that point um and starting
to pay back on the town share and then doing a ban for um the project costs above and beyond that. So that's sort of the timing we're looking at. Um we have an estimated another MBLC payment in June of 2026 and then another
MLC payment at the very end. Um, and then uh the library contributions for conservative uh conservatism sake, we're assuming them just come in at the end and then if they come in earlier, it'll it'll improve our cash flow. Um, and we won't have to borrow as much. So, that's sort of where we're at with that
project. Um, and that cash flow was updated recently, so this should be pretty good timeline for what we're looking at. >> Mandy, >> thank you. Sean, um, what's a couple of questions. The first one is the ban that you're looking at going out in December.
How much is that going to be for or approximately? >> Uh the So I have again I haven't kind of interrogated the financial adviser on this yet, but um about 9 million in December. Yep. >> Okay. Um and and the next question is
there is currently part of the funding is CPA for a million dollars that I think was intended to be borrowed. How does that work within these bands? And then the final um town share when you bond it out, will that be included in
the the bond? >> I believe that's in that I believe that's in that 2.8 that I already gave you. Um looking at the way he's got this organized. Um so that portion I believe is already been borrowed as part of that 2.8. Um but if not, it would definitely be in the new the new money that we're
borrowing in December. >> And so it might be in the one big bond when you go to bond. >> Yeah. Um it probably will be, but we'll have to piece out funding uh you know where the expense is to pay the principal. Yeah. >> Uh interest and principal payments on it. Yep.
>> Thanks. >> So, okay, I I guess I'll raise my hand and call on myself. There we go. Um the um normally um the beginning discussion of the capital budget and the capital plan
would start in Februaryish. And the library has a line in terms of uh debt service going through it. And that was updated, Sean, in just as we closed out the capital plant in terms of it went lower
than it had originally been because there was it the building hadn't started to be built yet. Will you have a revised set of estimates going out for the five-year plan that incorporate what you what you have just told us? You know,
>> yeah. When you say the line, >> what I'm getting at is, you know, how how much will that be costing in terms of our rural capital plan and our resources? >> Yeah. Yeah, the finan so unlike the for river project where the financial adviser actually modeled out the debt
service. Um he hasn't modeled out the debt service yet for the library project based on that cash flow I just um described. Um I think he's looking for some direction from us first and then he will um but yes whatever our most current um cash flow analysis is and
related debt projection based on that um that would go into that that capital plan when we put that together. So, um, you know, there may be a couple versions between then and now, um, just based on us working together, but yeah, we'll definitely update that number and the capital plan to be whatever the most
current is. >> Mandy, >> thank you. Two other questions. Um, you said the next borrowing December is going to be for about $9 million. Um, how long till the next borrowing after
that or stuff might like how It's not a last thing, but yeah, how how long is that intended to sort of I understand it would be a short-term issue, but how long would it pay bills? Um, so if we were to um if we were to borrow the 9
million in December and then again it would be like a three-month ban, which we would issue another uh uh borrowing in March of 2026, which would incorporate that 9 million plus um what we already had as a
ban, the 2.8 plus some new money um looking at the cash flow of the project going forward. um cuz the 9 million is sort of equal to about 3 months of bills being paid based on the cash flow that we have. So the March uh borrowing is
projected to be about $18 million. Um so it would be the 9 million plus 18 million in new borrowing plus the 2.8. So in total it's going to be about 30 million that we would have on the books um in March. And then that would carry
us through the end of the project. Um, at the end of the project, we would pay off that 30 million with any with the MDLC money as we receive it and with the library contributions, leaving us with just the the portion um that would be the the town share.
>> Okay. Thank you. And and following question, when are the M MBLC payments slated to come in and how many more do we have? I looks like we've gotten about half of what they're going to give us. >> Yeah, we've gotten three of five. Um, so we have one. Again, I have to dig into
this a little bit, but it's projected for June of 2026 and then one for March of 2027. So, it would be after close out and things uh all that. >> And and those are Did you say 2.6 each time? >> Uh they're they're each about 2.77
billion. Yeah. >> And Sean, can you speak to the the uh differential in sort of the interest rates that you know for the bands? Is there kind of a general interest rate that we're seeing when we when we do one of these uh short-term notes? I mean, is it like in a
>> um you don't have to you be specific, but general >> interest costing, >> you know, I haven't actually gotten that far yet. So, I I I can send the group. We get um so one nice thing that we get by being a customer of Uni
Bank is we get monthly offering reports. So, we get to we can see every community that went out to borrow and what the rates were for short-term and long-term. Um, so I haven't looked at it recently, so I don't want to throw out a percentage because I could be off. So, u, but I can email the committee after with what our current bands are at just
so you have a general sense of where we're at. Um, currently. Yep. >> I think I think the good news the good news is compared to two years ago, it's on the downside rather than the upside. >> Yeah, it's trending down, I think, which is good. A few a few years ago we were thinking
four might be good you know and now you know so but but yeah but and and and the spread Joe well you know this too the spread was bigger too >> yeah absolutely yep um but yeah obviously obviously after 22 those short rates definitely popped out but they are
coming down so that's good all right thank you >> other questions on Fort River or the library No, thank thank you for I know it was Sean had been back by one day I think when I asked him to see if he could
update these numbers and like said sure you want them you want them in a week but thank you very much >> you're welcome >> for doing that um I I don't think there's you know the other there there aren't any minutes to review and um I
will try to figure out where the minutes are the other is just we we've been talking about the updating of the guidelines and I think everyone knows um on the council but I wanted to make sure both Joe and Tom know Monday night we'll
get the indicators report which will be the projections of revenues and expenditures out multiple years with an explanation of where we are. Um and that's scheduled for six to start at 6:00. So, it's a it's an early start for
the council meeting. So, that'll be not just the beginning of the council meeting, but it's the first item on the council meeting and you are invited we will if you're there, we will call on you to be full participants of at that meeting and it's a time where we can ask
questions. That feeds in then to our what we already started as a uh as a recommendation for guidelines and the guidelines report from last year has been posted. We started talking
about that in over the summer and Joe I'm not sure you were there then so I make sure I'll make sure you get a copy of that and we we started focusing on which areas are the key areas. So some of them are what percent and is it equal or not for operating budgets can we
recommend what what percent for capital and as Mandy said we made some recommendations last year about uh budgeting and revenue forecasting based on what we were seeing and we also made some comments on the use of free cash
free cash once it's certified where where one might put it so I think one We don't have another meeting until November 12th. That's a Wednesday in the schedule. So that's where we'll focus on the guidelines based on what we heard on
the indicators. And I think maybe we can write a shorter report and really focus on those key areas. We've been writing longer reports to talk about goals more generally, but trying to expedite the report because there'll be a lot of interest in the public as well as the
council on discussing this. So, we have that meeting and we have a second meeting the week after that in November before December is on our schedule. And Paul, I see your hands up. So, just >> the 12th and the 19th. What what are the times of those meetings or just
>> the the 12th is the 12th is a Wednesday, >> right? >> Because because we we were hitting these holidays. The what time? >> The 12th is 2 o'clock. >> Okay. >> And the 18th right now is penciled in as 10 as 10 in the morning because we shifted the time starting time so the
worker could make it. So unless I hear differently that those are still in the it's the agenda. So those are the times for those m And Kathy, there's um Oh, sorry. Did someone else Oh, that's okay.
>> You can go, Joe. Okay. Um I apologize. Uh next Monday, there is the council meeting next Monday. >> The council is meeting on Monday night. It's a Zoom meeting and I'll make sure you get a um invite to that. Athena, >> I may not be able to make it. I literally am going to be on an airplane
to California for business uh on on Monday night, this next Monday. So, I I will try to zoom in if I can. Right. >> And and and the thing is it's it's a Zoom meeting so you can >> I'll try to do it on the plane. That'd be great. >> But the other thing we can do is give you a link right after the meeting. You
know, it's it's a document that gets presented so we we can put it in the finance committee packet, but I'll make sure you get it as well. >> I appreciate that. Thank you so much, >> Mandy. Yeah. I just wanted to say I wholeheartedly support trying to get the budget guidelines down to
absolutely what is necessary to be in them and as soon as possible. I think it makes it a more ease of use and clear document to do that. Um, and then I just had a question for Sean. Um, I've been getting a lot of questions as to when
sort of budget closeout will be done. Um, and I know you just started, but um, and we've been really short staffed, but can you give us an estimate of when we might see the year ends, the close out, the certified free cash, and then for for Paul, I guess, any potential
financial orders that come out of that? >> Yeah. So, um, in terms of priorities, our goal is to get the indicators report and sort of the projections done for Monday and then really turning our focus to closing out
FY25. So, getting our our schedule A's, our all the reports we have to submit to the state done, um, which allows us to certify our free cash, make sure we're ready to set the tax rate. Um, and along with that, we'll be doing like the final uh, budget report. So the um um my take
is that that final budget report has not been presented to the finance committee yet for FY25. Okay. So as part of that close out, we'll do that as well. Um yeah, so I would say hope and have all that done during the month of November. Um or in some cases have to have that
done during the month of November. >> Yes. >> Am I correct that the council has to set the tax rates by the end of December? >> Yes. Yep. Um and typically we don't want to wait that long either. We typically will try to do it earlier. Um I think the classification hearing is scheduled
for mid November 17th. Yeah. >> Okay. >> So right now Sean, we have as I just said a meeting on the 12th and a meeting on the 18th. I don't know whether you'll be ready on the 18th. The next one would be December for finance. Um so I mean you I you don't have to commit right
now, but I think that's what Mandy was saying. You know when when we might be seeing that. So if we have to add a meeting, we will. >> Okay. >> Yeah. >> You know, or if we have to post a longer meeting, we will, you know, in in
somewhere in adjusting to the fact that >> you can only do so much. And >> yeah, no, no. Again, we're going to it's it's a high priority again. It's the highest priority for us after we get this stuff done for Monday night. And then um and we're hopefully be hiring a
comproller soon. That'll accelerate how quickly we can get a lot of it done as well. Knock on wood. Um, but like I said, it has to get done. So, it's going to get done one way or the other in the next month or so. >> Yeah. So, so once we set submit our stuff, then the do has to take time.
They've got 351 cities in towns they have to process as well. And usually they're all coming in at November, December. So I have just as I think everyone knows as chair of finance I've been working with a group um we had talked about this
at the council level we a group from the other four towns that have finance people in it in terms of regional and and getting ready for the four towns meeting and there is a data report that was generated by the data people in each
of the four towns meaning the finance people and it'll it'll be in the council packet for Monday night, but the other towns have not seen it. You know, the select board members have not seen it yet. So, there's a discussion of that
tonight um after this meeting. So, I will send you the draft just everyone on the finance committee because we won't have an opportunity to weigh in on this before the four towns meeting happens, but there'll be an opportunity for all the counselors to weigh in on it on
Monday night. So, I'll just send everyone a copy of this. It's literally uh charts, you know, some, you know, what we're all facing in terms of revenues and and and where we've been over the last few years, tax rates that we pay, drawing some from the Mars
report. So, I um having mentioned it, I think I can post it in today's packet, but I will also send it to everyone. So, to the extent the public wants to see it, they can see it in today's packet. But I I don't want to present it because something might change from it. So, and
it's not on the agenda. So, this is more an announcement that you're going to see it on Monday night. And if I send it to everyone and post it, if you have any comments and you send them back to me, um it would be great just so that I can
have that um to think about for Monday night and for the meeting after that. So that that meeting my understanding and and Joe and Tom you are invited to come to that four towns meeting this is on the regional budget is there will be an opportunity for the towns to talk not
just for the regional it it's going to be uh an agenda that will be a back and forth but I haven't seen an agenda yet either you know so I just know we've been invited so so that's just an announcement on that
and anything else because I think you know we're the rest of the year will be on this focus on the budget the focus as Mandy said on certified free cash and what if anything the town is proposing for the uses of that free cash where
some of it could actually be put into the capital budget the coming up next year's capital budget plan um allocated so we'll we will have time for that between now and the end of December it'll be a fun time for all of us
is the way I look at it. So beyond that, um I will make sure this audit report is posted in today's packet and the agenda is posted. That was just um I thought it had been and when I checked this morning, it wasn't. And I will try to find out what I can do about
getting the minutes posted. Bob, some of the ones you reviewed have not been posted yet. I reviewed several months worth. They haven't been posted yet. So, I'll just try to catch up so that when people want to look at minutes, they can find them if the if they want to read
minutes. And I I don't have anything else. So, um I think I'll make a motion to adjurnn unless anyone has anything else they would like to bring up. I make a motion to adjurnn then. >> Second.
>> Bob seconds. Kathy's a yes. Bob, >> yes. Councelor Hannaki. >> Hi >> Andy. >> Hi >> Joe. >> Hi >> Tom. >> I support
>> it's unanimous and a big thanks to Sean >> for coming back to us for bringing us a finished order. Thank you very much. >> Finance committee has always been my favorite. So it's smart for you guys to know that >> we we are adjourned. >> Thank you. >> Bye everyone.