September 25, 2018 Financial Planning committee

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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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