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September 25, 2018 Financial Planning committee

9/28/2018

 
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Financial Planning Meeting
Tuesday, September 25, 2018 at 7:00pm
O’Brien Meeting Room, Town Hall

Board/Committee members in attendance
·         Mike Butler
·         Mayanne Briggs
·         Jim MacDonald
·         et. al.

Agenda
●     Investment Policy
●     Debt Management Policy
●     Capital Policy
●     Stabilization Fund
●     Next Steps


Investment Policy
  • Reviewing markups to investment policy document
  • Some change asking for collateral
    • 102% - extra 2% for fluctuation
  • New language from state law that prevents having an account with a bank that makes up >60% of their total holdings – avoid being the only depositor at a small bank
  • Diversification – no more than 25% of the town’s cash to be invested with a single financial institution
    • Differentiated between investment and cash
    • MMDT – not collateralized, an investment
    • Cash = deposits from tax payments and other sources that are used for day to day operations
  • Reporting requirements – treasurer collector put something in writing each year in the town’s annual report
    • Don’t want to list all accounts/securities – too many
    • Will this be available on the transparency module? (probably not, could offer periodically as applicable due to level of interest)
      • Transparency module – part of town-wide initiative, for greater transparency on town finance information
  • Custodial credit risk
    • Came from suggestion of auditors
  • Vote to recommend adoption of investment policy
    • Unanimous in favor
Debt Management Policy
  • Reviewing markups to debt management policy
  • Capital items costing <$25k need not be included in the capital improvement plan
    • Previous limit was $10k
    • May be paid with free cash
  • Improvements to buildings and other large expenses (>$250k) may be paid for by borrowing
  • Projects >$10m may be paid for by borrowing paid from debt exclusion, regularly budgeted debt service, town reserves, or the Robin Reyes Major Capital Stabilization Fund
    • Previously $4m – came from smallest project at the time (senior citizen center)
    • Next smallest project is unlikely to be <$10m, need to assess future projects
    • Might not even need a number, might limit options later
      • i.e. phased project broken up into chunks with smaller individual dollar amounts
    • Revised language to list all of the payment options in the first sentence, including the Robin Reyes fund and eliminated dollar amount threshold. Maximize flexibility
    • Add a sentence about the purpose of the Robin Reyes fund – clarify its purpose (large brick and mortar building projects), make sure it doesn’t get used for things it’s not supposed to
  • Ability to fund has increased a lot over last 6 years
    • Free cash – likely won’t continue to be there
    • Robin Reyes fund – will be there
  • Debt limitations
    • Debt service ceiling for non-excluded debt = 10%
    • Debt service floor = 2%, promote continued investment
      • Not high enough, last year’s operating budget was ~6-7%
      • Recommend changing to 5% - increase current amount which is definitely too low, but leave margin to current levels
    • Forecasting debt
      • Excluded debt is rolling off
      • Debt service will increase as projects complete (Town Hall, Public Safety Building, ECEC)
      • Need to double check ceiling and make sure it’s high enough
  • Motion to vote on debt management policy
    • Unanimous in favor
Capital Policy
  • Change dollar amount from 10k to 25k
  • Discussion about defining what qualifies as capital
    • Large line items that an individual department doesn’t want to absorb as an operating cost
      • i.e. traffic studies
    • Bundling of smaller dollar value items
  • Add language about the Robin Reyes fund
  • Language change – town administrator to town manager
  • Motion to approve capital policy with proposed changes
    • Unanimous in favor
Stabilization fund
  • 6-7m (~6-7%)
  • Where does interest on the fund go? (Reinvested, stays with the fund)
  • Amount in the fund grows due to interest accumulation without town meeting voting to put any more in it
  • Might want to consider actively putting money in to maintain AAA rating
    • What are the rating agencies actually looking at? Percentage of operating budget? Account activity?
  • Considering putting floor on the stabilization fund (5% of operating budget)
  • Under what circumstances would the stabilization fund actually be touched?
  • Schedule meeting for 10/11 at 6pm to finalize the financial policy documents
Meeting adjourned (unanimous in favor)


Open Discussion/Public Comment
No open discussion/public comment




Notes taken by Justin Reiter



Notes reviewed by Heather Springer

Keywords:  Stabilization Fund, Capitalization,  Debt Management, Investments

Community Notes are not official minutes or transcriptions of a meeting. They are intended to provide summaries of discussion and actions taken at meetings. For official meeting minutes, visit the Town of Dedham’s website or contact the Town Clerk.


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