CITY OF NORTHAMPTON

SUSAN WRIGHT FINANCE DIRECTOR

Office of the Mayor 210 Main Street Room 12 Northampton, MA 01060-3199 (413) 587-1255 Fax: (413) 587-1275 swright@northamptonma.gov

MEMORANDUM
TO: City Council FROM: Susan Wright, Finance Director DATE: August 10, 2012 RE: Report to City Council for August 16, 2012 Meeting Orders: Accept $500 Gift to Fire Department: The Fire Department received a gift of $500 from Mr. Ken Patel of Quality Inn and Suites, 117 Conz Street in Northampton. The gift will be used toward the purchase of a new dishwasher for the Fire Department. Formal acceptance of the gift by City Council is required under MGL C. 44, sec. 53A. Budgetary Transfer for Non-Represented Personnel Salary Increases FY13: The Mayor has chosen to provide salary increases to selected regular, non-temporary, non-represented employees for FY13. The increases mirror those provided to members of NAPEA. This order excludes Police Lieutenants, Police Captains, the Assistant Fire Chief and intermittent NR employees. A list of the positions that fall under this category is included. The total cost is $51,752 and the order moves funds from the Salary Reserve Account into the appropriate departmental budget line items. There is $200,000 budgeted in FY13 in this account. This account is also used for vacation and comp time payouts when employees resign or retire. Inter-municipal Agreements: The following FY13 contracts are to provide to or share services with neighboring municipalities. Each of these agreements is allowed under MGL C. 40, s. 4A Governmental Units; joint operation of public activities; termination of agreement; governmental unit defined; financial safeguards. This section of law allows the chief executive officer of a city to enter into an agreement with another governmental unit to perform jointly or to provide services if the agreement is authorized in a city by the city council, with the approval of the Mayor. I have included copies of each of these agreements for your approval: 1) Board of Health Shared Services with Amherst for a shared Assistant Sanitarian and Public

Health Nurse. Amherst will employ the Assistant Sanitarian and Northampton will employ the Public Health Nurse and each entity will receive 50% of the employees time. The costs will be shared equally by both towns. 2) Building Inspection Northampton will provide the services of a Certified Building Official and Zoning Enforcement Officer to the Town of Williamsburg for the sum of $31,000 in FY13. 3) Electrical Inspection Northampton will provide the services of an Inspector of Wires to the Town of Williamsburg. All permit fees for electrical permits will be turned over to the City of Northampton as payment for services. 4) Veterans Services Northampton will provide Veterans Services for the towns of Amherst, Chesterfield, Williamsburg, Cummington, Goshen, Pelham, Worthington for a total of $102,116. 5) Regional Hearing Officer Northampton provides the services of a Municipal Hearing Officer to the towns of Amherst, Hadley and Easthampton pursuant to MGL C. 148A s. 2c. Violations of the state building code or the state fire code may be issued written notice. Alleged violators may request a hearing before a Municipal Hearing Officer. In Northampton, Dana Cheverette, a retired Deputy Fire Chief, serves as the Municipal Hearing Officer. Reprogram School Capital Projects: The School department would like to reprogram some cash capital money. Specifically they have an urgent need to install a new heating system condensate tank at Leeds Elementary estimated to cost $15,000. This is integral to the operation of the heating system at Leeds and must be fixed in August so the building can be ready for the upcoming heating season. The School Department has identified three projects that have excess funds that could be reprogrammed to cover the cost: 19303 586118 11 Leeds Bell Tower project complete $5,369.84 remaining 19303 586102 11 Bridge St. School Ejection Pumps project complete $6,324.12 remaining 19303 586117 11 Jackson Street School Tile Replacement Project project nearing completion would reprogram $3,306.04 of the $21,958.50 remaining. Reprogram MIS Capital Projects: MIS would like to reprogram funds remaining in two borrowed capital projects to be used to replace computers on an ongoing basis, as part of the five year technology replacement plan. MIS has identified two projects that are complete and have funds remaining that could be reprogrammed to the Five Year Capital Plan account 3000 350910 10: 3000 350902 09 Install Fiber Optic WAN project complete $54,700.69 remaining 3000 350901 09 Install VOIP Telephone System project complete $2,336.11 remaining

FY12 Close-out Information: Update on FEMA Reimbursements: Hurricane Irene The total eligible project costs related to the August 2011 storm and resulting damage was $96,441.85 of which the city has received a 75% reimbursement of $72,331.39. The city received the total reimbursement prior to the end of FY12. Therefore, all departments were reimbursed for expenses prior to the fiscal year end. Halloween Snowstorm To date, eligible project costs related to the October storm and resulting damage have been submitted amounting to $229,476.97 of which 75% reimbursement will be $172,107.73. To date, the city received reimbursement for one project worksheet amount to $53,279.18. This reimbursement was received prior to the end of FY12 and departmental expenses related to that reimbursement were credited to the appropriate department prior to fiscal year end. We are waiting for two other reimbursements of $89,917.33 and $28,911.22. The remaining expenses related to the storm that were not reimbursed in FY12 were covered in individual departmental budgets and therefore these reimbursement that will come in FY13, will close to the general fund at the end of FY13. There may be one more project worksheet approved for this storm for approximately $1500. General Fund: General Fund Budget Revenues Attachment A Attached is spreadsheet from MUNIS that shows the revenues that came into the General Fund for FY12 to date. The numbers will continue to shift slightly as the fiscal year is still being closed out. There are also two revenues that are still to come in and will be credited to FY12: $7,025 for Building Department Inspection Revenue and another $9,679.24 from Smith College for the PILOT payment. It should be noted that two line items actually came in higher, but anything over the original estimate is transferred to another account. The two lines are: SVAHS Tuition, which came in $117,672 above the original estimate, so the surplus is moved to their Tuition Revolving Fund; and Parking Revenues, which came in $360,897 above the original estimate, so the surplus is moved to the Parking Receipts Reserved for Appropriation. The main reason for the parking surplus was the increase in meter and parking fees that was implemented in August of 2011, but was not factored into the FY12 budget. Page 4 of this report shows the total revenues received to date are $70,706,253 (after adjustments) and compares those revenues to what we budgeted which was $70,821,531. In FY12 we collected 99.8% of estimated revenues which is better than FY11, where we collected 99.7% of estimate revenues. Also of note, backing out uncollected real estate taxes, which will eventually are collected, revenues came in approximately $603,941 over original estimates. Some other revenue highlights: Tax title revenues netted $275,090 in back taxes and $79,807 in interest on tax titles. The meals and hotel/motel taxes continued to increase over FY11 by

almost 20% for meals taxes and 8% for hotel/motel taxes. I have included a chart showing the meals and hotel/motel taxes received over the last five years. Parking tickets brought in a total of $922,126 which is $307,735 over parking ticket receipts in FY11. This is due mainly to the increase in parking ticket fines. The original FY12 revenue was estimated at $925,000 but revised downward in December 2011 at the time of the recap and tax rate setting, when revenue from tickets was trending $150,000 below the target. However, the Mayors reorganization of the Parking Department, brought parking enforcement activities back up to expected targets and the ticket revenue ended $45,231 above the revised estimate. One area of concern for revenues was inspection services. Inspection permit fees totaled $432,725 which is $87,498 below FY11 or a drop of 16.8%. In addition to lower revenues for permits this also impacts our new growth moving forward into FY13. General Fund Budget Revenues Historical Comparison- Attachment B: This spreadsheet shows the actual revenues for four fiscal years, FY09-FY12 and compares them with our revenue estimates for FY13. When the tax rate is set and the recap sheet done, some of the original revenue estimates may need to be adjusted. Attachment C: General Fund Expenditures for FY12 This printout from MUNIS shows the expenditures in the general fund for all departments excluding the schools. Funds remaining in the parking enforcement and maintenance budgets (approx. $91,000) were returned to Parking RRA Fund. Turnbacks are estimated at $1,025,000 after subtracting the approximately $120,000 in FY12 salary accounts which were carried forward into FY13 to fund collective bargaining agreements. On a general fund budget of approximately $70 million, these turn backs represent approximately 2%. Last year turnbacks amounted to approximately $660,000. Attachment D: General Fund Appropriation Expenditures Historical Comparison This spreadsheet shows the actual expenditures for four fiscal years, FY09 FY12 and compares them with our budgeted expenditures for FY13 in the general fund appropriations. I have included a spreadsheet that shows expenditures in four key budget areas over the past nine years snow and ice, veterans benefits, fire department overtime and legal expenses. The chart shows the three year average for these expenses and then compares three year averages with the amounts budgeted in FY13. As can be seen, the FY13 budget is more closely aligned with anticipated expenditures in these categories. I have also included a chart that details veterans benefits and reimbursements over the same nine year period. Revolving Fund Report C. 44 s. 53E - As required by MGL C.44, section 53 E I submit a report on the revenues and expenditures for each revolving fund for the prior fiscal year. Retirement Board: The Public Employee Retirement Administration Commission (PERAC) has issued its Annual Report for FY2011. I have attached the copy of the Retirement Board Profile for Northampton in this packet. I have also included a list showing the performance of all the systems for

FY2011. Northampton was third in the state for returns in FY2011. I note that the top four investment returns for retirement systems in FY11 are all systems managed by the same investment firm, de Burlo Group, Inc., Investment Advisors, Boston MA. Also please note our funded ratio is 65.2% which is about average for systems in the state. I have included information related to funded ratios across the board. This funding ratio and the investment return assumption work together and drive the citys annual assessment to the retirement system. We are currently on track to achieve full funding by 2028 and will be revising our investment return assumption with our actuary at our next board meeting. I highlight this information primarily because the citys annual contribution to the retirement system in FY13 is $4.3 million, a significant expenditure category in our budget.