Finance Committee

REPORT OF THE FINANCE COMMITTEE JUNE 2, 2010 A meeting of the Finance Committee was held on Wednesday, June 2, 2010 at 7:00 p.m. in the Aldermanic Chamber. Mayor Donnalee Lozeau presided. Members of the Committee present: Alderman-at-Large David W. Deane, Vice Chair Alderman-at-Large Ben Clemons Alderman-at-Large Barbara Pressly Alderman Kathy Vitale Alderman Arthur T. Craffey, Jr. Alderman Paul M. Chasse, Jr. Members not in Attendance: Also in Attendance: COMMUNICATIONS From: Robert Gabriel, Purchasing Manager Re: Contract Award for Route Optimization Services (Value: $30,000) Account: 801-59100-8100-8200 Miscellaneous Services – Solid Waste $20,000 Account Balance Remaining After Purchase: $126,551 Account: 553-59100-6923 Miscellaneous Services – Streets $10,000 Account Balance Remaining After Purchase: $49,427 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AWARD THE CONTRACT TO ROUTESMART TECHNOLOGIES IN THE AMOUNT OF $30,000. FUNDS ARE AVAILABLE IN ACCTS. 801-59100-8100-8200 ($20,000) AND 553-59100-6923 ($10,000) ON THE QUESTION Mayor Lozeau I would let the committee know this was approved by the Board of Public Works. This is something we have been working towards for quite a few months. It has been about 10 years since we last looked at our routes for trash, recycling pickup as well as plowing and street sweeping. This is an opportunity to have a company come in and work with us and do what is called route optimization. That is what is before you. We expect it to be about a total of 10 days to complete the project. We certainly think it would be beneficial and very cost effective. We talked a little bit about it during our fleet assessment meeting when we provided the fleet assessment. This is going to help us determine the number of vehicles we think going forward as well. Are there questions or discussion? Alderman Chasse If they are going to optimize all the routes, does this mean the city engineers, the trash engineers are going to be able to get out earlier as they will be able to get their job done faster on a daily basis? Mayor Lozeau As you know we currently have a pick up and go home policy so... Finance – 06/02/10 Page 2 Alderman Chasse Absolutely. Mayor Lozeau We will have to see what the optimization is. They will know our shifts, what the shifts are, they will know what needs to be done, and some routes maybe they will change it and there will be less routes that take longer or the same number of routes. We will have to see what they bring us. Alderman Chasse It will be very interesting. Wasn’t this already done prior? Mayor Lozeau We have never had it done this way. It has always been done by paper. We looked at purchasing software to do this work, and it was very cost prohibitive so it seemed to make sense to take this approach. But if you look at the way they have done it in the past, they take city routes and they work together and determine what they think is the most effective way to do it. Clearly, they have done a good job with what they have had to work with. This is a great opportunity for people to have input and put it through an electronic system that will map out routes much like you see UPS do or other places like that. Alderman Chasse And we are getting this all for $30,000 versus $62,000 or $139,000? Mayor Lozeau Right. Alderman Chasse And it was all the same type of supermodel? Mayor Lozeau I think probably more than we needed. I feel very confident in the team that worked on this and their ability to pick the right vendor for exactly what our needs are. My hope is that we will be able to benefit from the efficiencies that it determines and from looking at what vehicles we may or may not need in the end. Alderman Vitale You said it was ten or more years since this was done previously and it was done paper wise the last time. Mayor Lozeau Correct. Alderman Vitale When did we get our new trash trucks, which sped up the trash pickup? Was it done before we had our new trash pickup trucks? Finance – 06/02/10 Page 3 Mayor Lozeau Before the automated trucks, yes. Alderman Vitale So with the way they pickup and everything it should … Mayor Lozeau We think there will be a difference. Alderman Vitale …straighten that up a little bit too. Mayor Lozeau We think there will be a difference. We have some areas that the streets are very small and we have trouble backing trucks down, we have some dead-end street problems. Those are all things they can put into the formula. Alderman Vitale Do we know how many new roads have been approved in the last ten years that will be encompassed? Mayor Lozeau We were talking a little bit about that like Majestic Heights and some of the other areas, Maplewood, those are all developments that happened after the mapping, which of course have been incorporated into the routes, but this is an opportunity to do it most efficiently I believe. Alderman Vitale If we do see considerable savings what do we see as like a next step? For example, that pick up and go home, if they are finding that they are even an hour earlier? How often do we on trash pickup do they pick up and go home early most of the time? Mayor Lozeau The majority of the time. Alderman Vitale The majority of the time? Mayor Lozeau Yes. Alderman Vitale Okay. Finance – 06/02/10 Page 4 Alderman Pressly Since we are nearing the end of the budget year, what else will this $126,000 be used for? Balance remaining? Mayor Lozeau There are things targeted for the different dollars here. I can’t tell you off the top of my head, but this was budgeted for. We planned on doing something here. Alderman Pressly Did you budget for the $126,000 or the… Mayor Lozeau That is for miscellaneous services. It is not just for this. Alderman Pressly Okay. Thank you. Mayor Lozeau You are welcome. Alderman Deane Thank you. On the RouteSmart bid that we received, on the front page when you look down to invoicing terms, there appears to be, on the second bullet, it says “Invoiced 50% upon digital deliver of” and then there is no description. Would that be bullet #5 above under deliverables so after of it would probably say something like “digital GIS route data with updated route/sequence information, turn-by-turn travel directions and/or COTS map outputs in PDF format.”? See how that is missing there? Mayor Lozeau Are you speaking about the memo or are you speaking about the contract? Alderman Deane The RouteSmart… Mayor Lozeau The contract itself? Alderman Deane Yes. See where it says invoicing terms, the second bullet? Mayor Lozeau Right. Finance – 06/02/10 Page 5 Alderman Deane What comes after “of”? Mayor Lozeau Mine says completion of the project initiation meeting. Alderman Deane That is the first bullet. Mayor Lozeau Right. Alderman Deane And then the second bullet “Invoice 50% upon digital delivery of”. Mayor Lozeau Of the routes I would imagine. I didn’t catch that. Alderman Deane So what is it going to be? Mayor Lozeau I will make sure we know what it is before I sign the contract. Alderman Deane Okay. I knew you would do that. Yearly maintenance and licensing fees? Mayor Lozeau There aren’t any because we didn’t buy the software. Alderman Deane So the acceptance of this quotation is limited to the RouteSmart Technologies End User License Agreement. That is what it says down below in the paragraph. Mayor Lozeau As you know, software requires annual updates and licensing fees. This doesn’t. Because we are using their product, I am sure there are certain licensing things they expect us to agree to; that we wouldn’t give it to somebody else or use it for purposes other than what we have stated. It is their product/patent type of property. Alderman Craffey Intellectual property. Finance – 06/02/10 Page 6 Mayor Lozeau Intellectual property – thank you Alderman Craffey. I am sure they just want to make sure that we agree to their terms. Alderman Deane Is limited to the RouteSmart Technologies End User License Agreement. So we are going to agree to that. There is no yearly maintenance or licensing agreement. Mayor Lozeau Correct. Alderman Deane So there is no re-occurring cost. Okay. Thank you. Mayor Lozeau You are welcome. Alderman Vitale Is the soft yard waste pickup included in this too? Mayor Lozeau Yes. All set? MOTION CARRIED From: Robert Gabriel, Purchasing Manager Re: Contract Award for Benefits Consultant (Value: $33,600) Account: 308-83025-6209-6105 Consulting - HR Account Balance Remaining After Purchase: $19,461 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AWARD THE CONTRACT TO WORKPLACE BENEFITS SOLUTIONS IN THE AMOUNT OF $33,600. FUNDS ARE AVAILABLE IN ACCT. #308-83025-6209-6105 ON THE QUESTION Alderman Deane Thank you. Under the scope of services, #3, it states “the City’s health insurance advisory committee”. Who is on that committee? Is that the one that met at the Hunt Building a couple 18-19 months ago? Mayor Lozeau I don’t know. Actually the health services advisory committee that I am aware of is the one that is made up of management and the labor unions. That was created under the former administration. I have had only one meeting with them when we were talking about prescription carve outs, but I believe that is the one that they are talking about here. I don’t think there is a different one. As you remember, we had Mr. Jack Sherry for quite some time. He was on board when I got here. Finance – 06/02/10 Page 7 Alderman Deane He is gone now? Mayor Lozeau About a year ago he said he thought he had done what he could do, and suggested that maybe after a year or so we revisit it. We did that. As you can tell we had a competitive bid process. The company that has been chosen is one that the selection committee got very strong references on from other municipalities where they have done work and saved significant dollars. You will note that the way that this contract is going to work is that they get paid the $33,600 that you see on the front page plus they get a broker fee on our stop loss, and then they get 10% on any savings that they realize for us. Their fees could be much higher than the $33,600, and they are very incentivized to find those savings because they share 10% of those. We get 90%. Alderman Deane They are not going through the claims though are they? Mayor Lozeau No they are not going through the claims, but there are some different opportunities that some municipalities are taking advantage of. I know that you raised before Alderman Deane the potential opportunity to have employees that receive health benefits look at their bills and then share with them any savings that they find because of errors or things like that. We looked into that, and it is very difficult because frankly most of the healthcare bills it is like reading hieroglyphics. I have made the effort to actually look at them. One of the things that this company we have chosen has done for other municipalities is create programs where they turn our employees into consumers so they will provide an opportunity to say this procedure if you go here costs X and if you go here costs Y and then the employees save from that so if they choose to have the procedure done some place where it saves $500 they get a share of that. That is one of the programs that they have implemented at other municipalities. There are some options that this company has raised with the selection committee and others that I think we might be able to apply here in Nashua and receive some benefits from. Alderman Deane I found, under the employee benefits plan, under Item C, “The city is self-insured in the area of group medical benefits. The current cost of the group medical program is approximately $34,000,000.” That is a lot of money. They are going to look to see if we should even stay self-insured or whether we should be out buying group policies? Mayor Lozeau I have yet to find any of the consultants that we have talked to since I have been here anyway that have recommended us not being self-insured. It has been beneficial to most of the municipalities that do it. A smarter way to maybe spend some of our dollars, and options that we might be able to give employees. I am very interested in doing more work on the health savings accounts and putting that out there as an option for some of our employees and our retirees. That is one of the things that we are going to look at. Things like that that look at it a little bit differently and give some opportunities to employees that they may not have now. Again, I think the idea of making them a consumer in this will be beneficial for all of us. That is one of the things that this company has brought to the table that really excited some of the people on the selection committee. Finance – 06/02/10 Page 8 Alderman Deane Your consumer comments is what is happening in the private sector. They look at increased deductibles and where there is reimbursement through the percentage of what the employer and the employee pay so instead of pre-paying the increase on the premium, if you don’t use the plan, neither the employer nor the employee is paying an increase for something they are not using, but if they do use the plan then the reimbursement on whatever the division is between the employee and the employer is implemented, which is a significant cost savings. It is another benefit that has a very large cash value to. Mayor Lozeau Especially again if we put the employee in the driver’s seat, make them a consumer, give them some choices, they may make different choices. Alderman Chasse First question is how many people do we have in the Human Resource Department? Mayor Lozeau In the city’s Human Resource Department? Alderman Chasse Yes. Mayor Lozeau On the benefits side, we have 3. Alderman Chasse As you know, I work in Human Resource Payroll, and this is my forte here. I have a problem with this one. I can’t swallow this pill because these consulting services will provide the city with: “1) both short and long- term strategic planning options for managing employee benefit programs to control future benefit cost increases; 2) meaningful analysis of current benefit market trends, and forecast how these trends will affect the city’s benefit programs in the future; 3) recommendations to enhance benefits as well as reduce costs associated with those benefits; and 4) compliance with the many changes brought forth by Health Care Reform allowing the City to leverage any incentive, subsidies or benefits that may be available.” All of these things right here are the duties of an individual that works in the Human Resource Department, and we are going outside and paying someone $33,600 to do the same things that fall under anyone who works in a Human Resource department. Then I go to the next page, and they advise the City of health benefit plans and implementing health benefit plans. Where is the Human Resource Department? That is their job. They should be getting the 4-6 insurance companies, you bring them all in and try to match apples with apples with every plan, and you accept the plan that is the least costly for the employer and employees. That is Human Resource. I do not understand why we have to go out with $33,600 for someone to come in and do the duties of someone who works in the Human Resource Department. Mayor Lozeau Alderman Chasse, let me try to give you a snapshot of why. First of all, I would say that there isn’t any company the size of the city that is self-insured that does this in-house. We have 2,800 active employees, we have over that in retired employees, we run a program that runs between $20 million to $30 million of self-insurance. We have always had a consultant on board for the city doing this work. Finance – 06/02/10 Page 9 I brought in a Deputy Benefits Manager into H.R., which was a position we didn’t have, and that staff right now focuses on all of the other components of benefits that we are responsible for; answering employee questions, paying bills that come in, managing the benefit process for the employees. We do all of that manually in-house. We had a year where we didn’t have somebody and we made it through that year without too much trouble. Our last consultant had negotiated administrative and claims rates that were pretty reasonable, but it really makes sense for us – we couldn’t hire somebody with this skill set for what we pay in H.R. We have different levels of staff in H.R., and the Deputy is the one that is most well versed in all of these benefits and I specifically hired for that point, but this magnitude of work they have to work in partnership with somebody that brings this to the table. We are not the only municipality that takes this approach. Frankly, this $33,600 is paid for just by the savings that they are giving us in the stop loss broker fee, which currently is 10%, and they are dropping it to 5%. Alderman Chasse I still have a problem with it because I do all of that stuff. I sign people up for their medical/dental STD, everything… Mayor Lozeau And our people will still do that. Alderman Chasse …and I still go through and I still call the insurance company some time during the year and sit down with them. It is all in the scope of under Human Resources. I am not saying I do it all by myself, but the majority of it I do, and I have to answer questions for people under human resource, I have to take care of the EAP. Mayor Lozeau We do that too. Alderman Chasse I understand that so… Mayor Lozeau The consultant doesn’t do any of that. Alderman Chasse … you have three people, and I’ve only got a human resource director and myself. Mayor Lozeau I just got to three people. One of the benefits people when I came here worked in the Risk Department, and I moved all of that into H.R. Alderman Chasse My next question is the head of the H.R. Department do they have a Bachelors Degree or a Masters Degree in H.R.? Finance – 06/02/10 Page 10 Mayor Lozeau We don’t have an H.R. Director right now. Alderman Chasse So there is nobody in there that has some human resource background other than on the job training? Mayor Lozeau No that is not true. Our Deputy H.R. person whose primary responsibility is benefits is educated and degreed in that. Some of the staff is educated and degreed in it. Everybody has different jobs. There are some administrative/clerical positions in H.R., and then there are some that you know our Deputy H.R. person speaks the same language as the consultants and the insurance companies and holds her own quite nicely with them, but can’t bring to the table some of the other things that this Workplace Benefits Solutions company can do. I spoke to the Mayor in Manchester. They use the same company. We talked about how they do it and what they realized in savings. Our department cannot handle this by itself, it just can’t. Alderman Chasse I need a job with the City of Nashua. Mayor Lozeau Alderman Chasse I don’t want to give people the impression that we don’t have the right employees here. What I am trying to explain to you is what is the magnitude of the company that you oversee? What is the healthcare? You are not self-insured, but the company buys insurance so what is that nut that is managed? How many employees, how many dollars? Alderman Chasse We have 200 employees. I don’t have my calculator with me, but… Mayor Lozeau And how many H.R. people handle this work? Okay. So we have… Alderman Chasse Who does most of it? Mayor Lozeau We have 2,800 and we have 3 people, and that is not counting the retirees whose benefits have to be managed and whose plans have to be looked at and bills paid or not paid, who manage whether there are additional children on a plan or… Alderman Chasse The majority of that work is done once a year at renewal time. You are not going to tell me that you are hiring people continuously throughout the whole year. It just doesn’t happen. You are not hiring 10 people every week. Finance – 06/02/10 Page 11 Mayor Lozeau I am not saying that we are hiring 10 a week. I am just saying that in the magnitude that you are talking about… Alderman Chasse I just feel that these are all H.R. duties and why you need a consultant you can’t sell me on this one. Mayor Lozeau Maybe at the end of the year when we show you the savings maybe it will demonstrate to you that it made sense to do it. Alderman Chasse I will wait until the end of the year. Mayor Lozeau Okay. Alderman Pressly Thank you. How many other H.R. Departments are related to the city and will what is learned from this be shared with the other H.R. Departments? Mayor Lozeau The only other H.R. Department is at the school system, and we manage the benefits for the school, they don’t. Alderman Pressly What about police? Mayor Lozeau No. Alderman Pressly So that is the only other H.R. department. Mayor Lozeau They don’t do benefits we do. Alderman Pressly So they are connected, but why do they need one then if we do the benefits? They do the hiring … Mayor Lozeau They do the hiring, they do the termination support, they have a role, but we manage health benefits from one location. Finance – 06/02/10 Page 12 Alderman Pressly Okay. Mayor Lozeau Is there further discussion on this item? MOTION CARRIED From: Robert Gabriel, Purchasing Manager Re: Purchase of Emergency Preparedness Medical Supplies for Division of Public Health and Community Services (Value: $14,872) Account: 341-6449 EP Medical Supplies – FY10 Grant $4,718 Account Balance Remaining After Purchase: $106,131 Account: 341-6451 EP Medical Supplies – FY10 Grant Amend 1 $635 Account Balance Remaining After Purchase: $41,140 Account: 341-6452 EP Medical Supplies – FY09 Grant Amend 2 $9,519 Account Balance Remaining After Purchase: $28,713 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AUTHORIZE THE PURCHASE, THROUGH THE COOPERATIVE MMCAP AGREEMENT, WITH MCKESSON CORPORATION IN THE AMOUNT OF $14,872. SOURCE OF FUNDING IS ACCTS. 341-6449 ($4,718), 341-6451 ($635) AND 341-6452 ($9,519) ON THE QUESTION Mayor Lozeau This item and the next three items are all federal dollars that come in. It started in 2002, through Homeland Security for emergency preparedness. We are the leader in the region, the greater Nashua region. All of the items that you see on the next three motions are all things required to be purchased through this money, and approved by the State. Currently, most of our emergency preparedness supplies are for a three-day supply. This next process is trying to hit a five-day supply for when we set up in different places. You will see items for setting up different locations to backup hospitals, you will see trailers for things that are ready to go off and be used right away on site for where situations arise. We used some of these trailers previously for the H1N1 and when we have opened shelters during the ice storm. We provided cots and other equipment through supplies purchased through these kinds of dollars. I just wanted to give you a snapshot. You see the emergency preparedness grant come through and we accept it. This year you saw the one come through for $364,000. This one had some additional dollars because the H1N1 vaccine dollars came in in three phases. That is what you see here. Alderman Pressly Thank you. You pretty much answered my question. I noticed a similarity in the grants. Can you tell us a bit about the grants? Do we have to apply for them or are they offered to all municipalities? You mentioned it was for Homeland Security. Is this something we, as a city, have to chase down the dollars or do they offer them? Finance – 06/02/10 Page 13 Mayor Lozeau No. We’re are a region for emergency preparedness. There are a few regions in the state. One of the memos lists all of the different regions. I think it is probably the next one. Alderman Pressly Number 6 looks like the same… Mayor Lozeau Right. They are all basically the same, but the regions are called public health networks and include Stafford County, Franklin-Bristol, Derry, the Capital region, Monadnock Region, and Exeter Region are the different networks. We’re the large city in this region and so the money is basically automatically available to us. Alderman Pressly The money that is left over, is that to go through the end of the calendar year then? It looks like each account does have some remaining balance. Is that to last them the calendar year? Mayor Lozeau No. Actually it runs on the fiscal year as well, and I think they have items in mind to be purchased with all of their dollars that are available. Any dollars that aren’t spent generally get returned to the State. Alderman Pressly Looks like we might be returning some this year. Mayor Lozeau I don’t know which item you are looking at. I don’t think you are looking at the one we are looking at now. Alderman Pressly I see $106,000 left over, $41,000, $28,000. Mayor Lozeau In this one here? Alderman Pressly Yes. Mayor Lozeau Okay. Alderman Pressly Am I looking at something different? Number 3 we have three items… Finance – 06/02/10 Page 14 Mayor Lozeau I see where you are looking at. Alderman Pressly It says account balance remaining. Mayor Lozeau I see. I can’t tell you what their plans are with it. Alderman Pressly Okay. Thank you. Mayor Lozeau You are welcome. Alderman Deane Does some of these products have a shelf life? Mayor Lozeau Actually no. It was one of the concerns that I had as well so what they are purchasing are what they call durables so it doesn’t matter about temperature or life. The perishables they actually have an agreement with the hospitals where the hospitals will purchase additional saline and things like that that they will run through their rotation, but they will carry an extra 3 or 5 day supply depending on the agreement that they have with the region. We’ll pay for that and they will maintain it for us so that it is always available. Alderman Deane So this is increasing our supplies from 3 days to 5 days? Mayor Lozeau Correct. Alderman Deane So we are in need of another 250 client chart clipboards? We only have 3 days worth so now we need another… where are all of these items going to be stored? Mayor Lozeau They are going to be stored in the trailers. We currently have two trailers. You will see one of the items on tonight’s agenda is for an additional 3 trailers. Remember this is not just for Nashua. This is for the region. We are part of a region. We agreed to do that after Homeland Security was created and it looked at our communities looking at emergency preparedness and how we would approach that as a region. These are the recommended amounts from the state and the feds based on population in this region. That is why they provide the funding to cover the costs of those supplies. Those supplies will then be each trailer Finance – 06/02/10 Page 15 will have supplies to be able to go to a particular site, set up tables and chairs, set up cots and clipboards, whatever is needed at that site; white boards, all the stuff that you would use in a medical setup, for wherever it needs to go and any additional supplies that won’t be in those trailers, will be in the Gilson Road facility. We have designed a piece of that building for these supplies. Alderman Deane The Gilson Road building was worst than the landfill. It was a landfill for chemicals. Mayor Lozeau We got that from the state for $1 and we use it for storage of vehicles, etc. We have outfitted it for emergency preparedness supplies and other supplies like that so we have a place where we can go… Alderman Deane We are filling it up with all the stuff we get grants for from the federal government basically. Mayor Lozeau No we are not. Alderman Deane Well what happened to all the fire department equipment? That is all down there right, light towers. Didn’t we take two of those generators and put one at each school or… Mayor Lozeau There are some generators that are at different locations, but Gilson Road is not filed up with things like that. We actually put together a group that did an assessment of all of the different departments and what their space needs might be at Gilson Road, and then we laid out how the building would be used. There is a portion of the building that, the most significant portion, goes to DPW and then we have a part for Public Health, we have a part for City Clerk and records. Fire has some area, there is some outside area used for transit right now, and these three new trailers that we are buying will be able to be kept and stored outside. Alderman Deane Stored outside or inside? Mayor Lozeau Outside. So this is just spending the specific dollars for specific supplies that are required when we accepted the responsibility of being a public health emergency preparedness region. This has been going on since 2002. Is there further discussion? MOTION CARRIED Finance – 06/02/10 Page 16 From: Robert Gabriel, Purchasing Manager Re: Purchase of Emergency Preparedness Trailers for Division of Public Health and Community Services (Value: $37,675) Account: 341-6450 EP Medical Supplies – FY10 Grant Amend 3 Account Balance Remaining After Purchase: $84,979 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AUTHORIZE THE PURCHASE FROM REP ENTERPRISES IN THE AMOUNT OF $37,675. FUNDS ARE AVAILABLE IN ACCT. 341-6450 ON THE QUESTION Mayor Lozeau This is the one Alderman Deane that I was just referring to that are the three new trailers. Alderman Deane I was looking at all of the add-ons; options and upgrades. Mayor Lozeau These will have outlets and things like that so they can set up laptops in them, plug in, and do what they need to do on site. Alderman Deane The walls are 3/8 plywood. Mayor Lozeau We believe that this will meet the need. We don’t believe we will be purchasing trailers going forward. We think this will cover what is necessary. Alderman Vitale When were the last trailers purchased? Mayor Lozeau I am not sure when they were purchased; I just know that we currently have two 16’ trailers. This will be three 18’ trailers, and then we house the state trailer that is about 24’. Alderman Vitale There is no lifespan perse? Mayor Lozeau Not really. It depends on use and that sort of thing. I suggested to the Department of Health that they talk to the state about potentially being able to purchase one of those kind of pop-fabric garages that could go over them to protect them a bit from the elements. I am glad that they can be outside, but it probably makes some sense if we could protect them a little bit. They are looking into that. Is there further discussion on this item? Finance – 06/02/10 Page 17 Alderman Deane Is there any money leftover in this? Mayor Lozeau As I am noticing the numbers, I think that some of these are spending from some of the same accounts like if you look at the next one on the agenda, that same account number is here, and that balance is continually going down. I think when I answered Alderman Pressly’s question – sometimes I know the answer, but I don’t think about it when you ask it that way. If you look at the first page… Alderman Deane On the next item, it stops though. Mayor Lozeau Then it goes to the next one. The preparedness non-medical supplies, item #6 on the agenda, is the same account numbers as on that first page, 6449, 6451, 6452, and you see the money going down as they are spending it through this process. Alderman Deane But 6450 when you are done will still have almost $70,000. If they can’t park these things inside… Mayor Lozeau When I suggested that they look at it, they are going to look at the accounts and what those funds are available to be used on, and run it by the state. Alderman Deane It just seems like if they are buying all of this stuff that they should… Mayor Lozeau You asked about it being calendar year. I don’t think it is calendar year, but it could be the grant calendar cycle, which might be different than the calendar year and different than our fiscal year. Again, there were additional funds in these dollars so the state may say we level funded you for next year so we will add that. The options might be more than what is obvious to us this evening. Alderman Clemons I just want to say that I think that this is money well spent even if we never, and I hope that actually we never use these trailers to any great degree because if we did that means that we are in the midst of an emergency. I definitely support this and I think that my hope is that we never use them to the extent that they will be there ready for us. Mayor Lozeau What their purpose is. Yes I understand that. Alderman Craffey I just want to add to that, this is similar to what the military does whenever they deploy. They have these same type of vans and have everything set up. Having been deployed before it can be very very helpful. Finance – 06/02/10 Page 18 Once it is cleaned out they use them as treatment centers; people come in out of the rain, place to sleep, etc. It is very useful. Having been deployed before I have used these types of things before. Usually one van, it sounds like one van for one day. It is very similar. Thank you. Mayor Lozeau Is there further discussion on this? MOTION CARRIED From: Robert Gabriel, Purchasing Manager Re: Purchase of Emergency Preparedness Warehouse & Clinic Equipment – Vests For Division of Public Health and Community Services (Value: $11,874) Account: 341-6450 EP Medical Supplies – FY10 Grant Amend 3 Account Balance Remaining After Purchase: $73,105 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AUTHORIZE THE PURCHASE FROM SAFETY GEAR IN THE AMOUNT OF $11,874. SOURCE OF FUNDING IS ACCOUNT #341-6450 ON THE QUESTION Alderman Pressly Is there ever an occasion where they actually have a trial situation? Mayor Lozeau They do. Alderman Pressly Have they had one or is one coming up? Mayor Lozeau They have had one, and they have them I wouldn’t say frequently, but enough to be able to implement a plan. They have had training for it, and they meet again as a regional group and then statewide all the regions get together to talk about it. Alderman Pressly Thank you. Mayor Lozeau You are welcome. Alderman Chasse These vests are nothing more than a small light thing with different colors? Mayor Lozeau Right. They are like a traffic vest, but they are color coded based on the function of the individual that is wearing it. Finance – 06/02/10 Page 19 Alderman Chasse Chain of command? Mayor Lozeau One might be medical, one might be administrative, one might be supplies. Alderman Chasse It is all reaction team individuals. Mayor Lozeau Exactly. They have certainly designed this plan federally and state that is replicated in some communities, and then based on your local community, they do more specifics. A piece of it plays into where the Emergency Management Director I am trying to hire fits into some of this. Alderman Pressly What about the people that do this? Is this part of our existing staff; police and fire… Mayor Lozeau Oh yes. Alderman Pressly So this is one of their jobs? Mayor Lozeau Right. We have emergency preparedness staff that is hired under this grant and paid for under this grant at Public Health right now. Alderman Pressly Okay. Thank you. Mayor Lozeau You are welcome. Alderman Pressly They do other things too right or are they just here for this? Mayor Lozeau The staff that is hired under this grant focus specifically on the emergency preparedness component. Alderman Pressly Okay. Finance – 06/02/10 Page 20 Alderman Deane Does it total 760 people? Mayor Lozeau No. Regionally with the volunteers I am sure that it could total that. Alderman Deane It could? Mayor Lozeau It could. The biggest component of this is actually the volunteers. We have not had the time to invest in really exploring how the volunteers play into this, and it is something that I know the staff has been trying to work on, but it is just a little bit bigger than them. Alderman Pressly Who are the volunteers? Mayor Lozeau Just people in the community that get trained. During the ice storm, there was a group of people that came to the schools and provided different services. Some you don’t have to be trained for; scooping soup, making a bed, opening a cot. Alderman Pressly They just step forth whenever the emergency arises; people are there ready, willing, and able. Mayor Lozeau Right. And we really should be making more of a concerted effort in Nashua because there are people that want to volunteer that we have been unable to take as much time as we would like to train and get into the system so they can be deployed. Alderman Pressly You have a list of people? Mayor Lozeau There is a list of people that have volunteered and have been trained and a list of people that would like to once we can really implement something. Alderman Pressly Thank you. Mayor Lozeau You are welcome. Further discussion? MOTION CARRIED Finance – 06/02/10 Page 21 From: Robert Gabriel, Purchasing Manager Re: Purchase of Emergency Preparedness Non-Medical Supplies For Division of Public Health and Community Services (Value: $22,680) Account: 341-6449 EP Medical Supplies – FY10 Grant $3,428 Account Balance Remaining After Purchase: $102,709 Account: 341-6450 EP Medical Supplies – FY10 Grant Amend 3 $3,990 Account Balance Remaining After Purchase: $69,115 Account: 341-6451 EP Medical Supplies – FY10 Grant Amend 1 $11,002 Account Balance Remaining After Purchase: $30,138 Account: 341-6452 EP Medical Supplies – FY10 Grant Amend 2 $4,260 Account Balance Remaining After Purchase: $24,453 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AWARD THE CONTRACT TO STAPLES BUSINESS ADVANTAGE IN THE AMOUNT OF $22,680. FUNDS ARE AVAILABLE IN ACCTS. 341-6449 ($3,428), 341-6450 ($3,990), 341-6451 ($11,002), AND 341-6452 ($4,260) ON THE QUESTION Alderman Deane Where are these items going? Mayor Lozeau Into the trailers and to Gilson Road. They are part of the deployment of the five days of being able to…when you look at this list and you say well there is cables… Alderman Deane A desk and a hutch and a bookshelf and back supports and foot rests and… Mayor Lozeau I know some of it sounds almost silly, but this is, they are walking into a church hall or a school and they have to set up and provide services there. They are setting up mini offices to do what has to be done. I will point out that we ended up negotiating a discount of 18% from Staples who is the city’s current contractor. These are the times that I like giving the State back the money because it comes out of the same pocket in the final analysis anyway. Anything we save I think is a benefit. Alderman Deane Their furniture is junk. It is all of this knock down stuff that is…. Mayor Lozeau Is there further discussion on this item? MOTION CARRIED Finance – 06/02/10 Page 22 From: Robert Gabriel, Purchasing Manager Re: Purchase of Flu Vaccines for 2010-2011 Season Requested by Public Health Department (Value: $16,812) Account: 542-47015-6811 Vaccines & Medicines – Health Department Account Balance Remaining After Purchase: $0 MOTION BY ALDERMAN CLEMONS TO ACCEPT, PLACE ON FILE AND AUTHORIZE THE PURCHASE FROM GLAXO SMITHKLINE IN THE AMOUNT OF $16,812. SOURCE OF FUNDING IS ACCT. 542-47015-6811 ON THE QUESTION Mayor Lozeau As you can see, this is our flu vaccines that we buy every year. It is about 1,800 doses. This year instead of having a separate H1N1 vaccine and a flu vaccine, this is going to be a combined dose that covers both of those. Alderman Pressly I did read somewhere in the paperwork that some revenue comes from this. Sometimes Medicare pays for this and also we are down to a zero so this is one fund that is down to nothing. Mayor Lozeau Right, and it usually is. We usually buy all of the doses that we can buy, and when we receive a discount on the does, we buy more. Alderman Pressly And the shelf life on this since it goes into 2011? Mayor Lozeau Is for the whole season. Alderman Pressly The whole season, wow. Alderman Deane It is useless after the one year. Mayor Lozeau Exactly. Alderman Deane The strain has changed. MOTION CARRIED UNFINISHED BUSINESS - None NEW BUSINESS – None Finance – 06/02/10 Page 23 DISCUSSION Alderman Pressly Thank you. We started to talk before the meeting, and I would like to bring it up again – the warrant that we all sign here. It is a huge document. There is no way I can go through this and feel that I am being a responsible Alderman to know what is in there and what to even ask you about. I was wondering if you would sort of tell me and maybe the rest are interested also, how do you put this together, what do you use as a way of checking to make sure that the money is being spent correctly, and what should we look for. Mayor Lozeau Each individual Alderman may approach it very differently, but I can tell you, and we have had this discussion in Finance before, when I came in to my very first Finance meeting as the Mayor, I had not signed the front sheet of the warrant. You will see on the front sheet of the warrant, the CFO signs it. At that time, Alderman Bolton said to me you know Mayor you should sign this before we do so that we know that you have looked at this warrant. I thought okay. I went back to my office and I took that warrant and I started to go through it, and I dug out all of the accounts that matched, and I spent about 2 ½ hours on it after the Finance meeting. The next day I came in and looked at it again, and then I called the CFO, who at the time was Carol Anderson, and I asked her to come to the office, and we sat down and I said okay I am looking at this warrant, I am required to sign it, everything I sign I read. I said, and I am a little bit at a loss of how to do that and still do the rest of my job because I have spent 4-5 hours on it so far and I have barely made a dent. Alderman Pressly Well and I feel the same way. I am not comfortable signing something I don’t understand and haven’t read. Mayor Lozeau So there are a few things that have to be considered here. First of all there is nothing in the warrant that has not been authorized in the budget. Now one could argue that really did the budget authorize meals to the Hillsborough County Department of Corrections, and the answer would be no because when we do the budget we don’t know that. But there are provisions in the budget because it is kind of a living, moving document of things that change. The approach that I took in order to make sure that funding is coming out of the appropriate lines, it is the appropriate amount, we have received the service because what the warrant reflects is somebody says yes we received the service that is being paid for so the lunches came to the Hillsborough County inmates at the landfill when they were doing the work they were doing there, and they ate it so T.J.’s Deli or whoever did it actually brought us that food and now we owe them that money. By the time we get that warrant, it is too late to go back and say well we are not paying T.J.’s Deli because they have already provided the service. The responsibility falls with the division directors and their managers to make sure that they are properly managing their budget and that they are doing what they are allowed to do in that budget. Now some could argue that money gets moved and people are concerned about that, and I think that is a legitimate discussion, but that warrant represents payment due to providers of service. The payroll that is in that warrant every week that has been paid. We can’t say to somebody well we are not paying you, we haven’t approved the warrant. A majority of it is wire transfers for services received. What I implemented was a sign sheet that I saw Alderman Deane showing to you at the beginning of the meeting where each division director signs off and says to me I have looked at the lines coming from my budget, they are accurate, and they reflect services received. Alderman Pressly Okay. Finance – 06/02/10 Page 24 Mayor Lozeau At some point, all of us have to count on the professionals that we hire to manage their budget appropriately. Alderman Pressly Thank you. I agree with that, and I think we have excellent employees, and as long as I know that is the system I am more comfortable, but I think my question might be a throwback to the deficit that we had. Is there anything in this warrant that had we been more alert would have prevented the issues at the school department and the deficit? Mayor Lozeau Well actually I check the financials pretty regularly as does our CFO. It wasn’t necessarily the warrant that would show the deficit. It would be carried in the warrant for some of the things being paid, but the financials started to show that – in the city system you can’t cut a P.O. if there is not money in your account to pay for it. We have something in place. Unless you transfer money in to cover that, that is not getting paid. Alderman Pressly That stops that. There is no credit card there. Mayor Lozeau There is a system in place. For the schools, they have handled it somewhat differently. When I and CFO Gilbar noticed that April/May of the year that we had the deficit and we saw some of those lines were going in the red so to speak, we made calls to the school to say okay danger, danger, should we be concerned. The school’s response to us was no, we’re truing up the books, we are transferring money in, we are getting the USDA money for the food budget, all of these things are coming in, they will go into the lines, and it is going to be fine. I said really I am a little concerned about that so Mike being relatively new to the city as the CFO at that time, was uncomfortable as well, we put a call into the former CFO and said okay this is what we have been told and what do you think. She said you know the school does that a lot at the end of the year because things come in light the food budget when they get reimbursed from the USDA. With assurances from the school’s CFO and the Superintendent, we allowed for all intensive purposes – someone said to me well you have to take responsibility for that, the school had a deficit, in the final analysis you and the CFO are responsible. Alderman Deane A former Alderman said that. I was sitting in the room. Mayor Lozeau I would argue that okay if I have to take the buck stopping here I will, but I think it is a little unrealistic for there to be an expectation. What we have tried to do since that time and what now happens on a regular basis, is the two CFOs talk, discuss their numbers, know where they are going forward, and they have implemented some of the similar safeguards that we have in the city. When ERP comes in, I have much more confident because we will be able to really essentially lock things down in a way that will require people to pay closer attention. Our system now doesn’t really do that. Alderman Pressly That doesn’t affect the warrant is that correct? My concern is my responsibility. Finance – 06/02/10 Page 25 Mayor Lozeau But even if we found the deficit in the warrant, what I am trying to tell you is everything that is in the warrant is a service received and a bill that we owe. Alderman Pressly I appreciate that, but when you said that you caught some numbers… Mayor Lozeau It wasn’t in the warrant. In the monthly financials. Alderman Pressly I want to know where my responsibility starts and stops. Thank you. Mayor Lozeau The monthly financials, we put them on the web site so that all of you can have access to them, everybody can look. I will tell you that what most Alderman do with regard to the warrant Alderman Pressly is they look through, and they may not recognize an account number nor would I – we have hundreds of them, but they will recognize something like the Hillsborough County Department of Corrections, and ask why did we spend $1,000 or whatever on that. They will send in a question. We have a system in place. Questions that they see on the warrant go into the financial services office, they get disbursed to the departments where the questions have been asked, responses come back, and they get sent to the Alderman, and they will say well there has been work being performed by Hillsborough County Department of Corrections and they have done 4 or 6 times where they have brought in a crew of 15 or 20 people, we fed them lunch, and that equals… Alderman Pressly So Aldermen have been sending these questions in? Mayor Lozeau They do on a regular basis. Alderman Pressly Okay. Mayor Lozeau And they get their questions answered that way. All of you are welcome to use that system when you see something that you go oh I don’t know about that. Alderman Deane First of all, included with the warrant every other week, there is a chart of accounts, which is a very large PDF file, and if you want to spend the time you can open up the chart of accounts, which is what I do because they create 5 digit commodity code accounts for different purposes that weren’t in the budget to begin with, and that is like a moving target. I found items in the warrant with 5 digit commodity codes that didn’t exist in the chart of accounts because the chart of accounts hadn’t been updated, which I asked Mr. Gilbar about. I am finding these expenditures, but there is no 5 digit within the chart of accounts. He got back and said we have to update it. Finance – 06/02/10 Page 26 The issue with the school district had nothing to do with year end revenues coming in. It had nothing to do with that. They overspent. They exaggerated line items, they let them run deep into the red, and these were line items above and beyond what is a normal practice of theirs knowing full well as you stated earlier Mayor that these federal grants are going to be rejuvenating some of these accounts, but they just spent at will and they over spent. That is the bottom line. That is what they did. I have my opinion on whether it was done intentionally or not. The other issue we have is transfers in and around through different commodity codes. You might approve the payroll, the 11, 12, and 13 lines you can transfer out of, but you can’t transfer into – those are all payroll. The transfer sheets are available. While we are in discussion, I like the warrant. I think it is some very interesting reading. I look forward to that bi-weekly e-mail that I get, hello everybody here is how much money that we spent the last two weeks. Mayor I think that the whole thing with a former Alderman implying that you should have been on top of the school district issue was completely wrong. That same person sat in here for years while the same practice went on, but this time as the practice went on there was no revenue, there were no grants, there was nothing there to back up their deficit. In the past, the past practice of over-drawing on 5 digit commodity codes took place, but the revenues came in to cover the costs. That didn’t happen this time. I have been here too. I had spoken with Mrs. Anderson about some of it as well. I go through the warrant, I look at different things, I shake my head. Then we go back to the strength of our purchasing dollars and I look at where people are spending money, and it just does not make sense to me. It is not necessarily on this side of the river. A lot of it is grant money, and somebody is paying for that grant money and that is all of us. Even though it is grant money, I just think that more time could be spent on getting the best bang for your federal dollar. I am of the opinion that doesn’t happen all the time. That is taking nothing away from Mr. LaLiberte. I think he does an outstanding job for the school district. I don’t know whether they don’t have the time or what it is, but when you look through that warrant and you see how some of that money is spent it doesn’t make sense to me. Thank you. Alderman Clemons Thank you. One other thing I just want to say, the school deficit happened, but as the Mayor was saying, by the time it got to the warrant we had to look and say well okay so we over spent it, but what was it over spent on, and for the most part it was salaries and things like that, but it was expenses that the school department made. Along the same lines as the Mayor was stating, in the warrant you have to look at are the things that are in the warrant items that were approved by the individual departments that are in there for the purpose for which they were budgeted and that sort of thing and does the bottom line match up from what was spent. That is really what you are looking for. In my view, yes the school line was over spent. Obviously it was over spent, but in my view, what this document represents here is, is that money accurate. In other words, somebody didn’t pocket that money, it was all here, it was all in the warrant, it was all accounted for in the warrant. We knew how much it was just by looking at it. In my view, what you are looking for when you look in the warrant is are the figures in there accurate to what was actually spent out of the accounts. That is just my view of that. Obviously the money was over spent, but I think as the Mayor was saying, that oversight comes before the warrant is put together. It comes with these division directors looking at their budgets and then signing off on this and saying yes everything that was here was approved in my budget, it was approved, and it was money that we had planned on spending. I think that the process that we have in place now, and even then to some extent, maybe not with the school department, but certainly now I think is sufficient, and I have no issues signing this document. I never have because like I said, in my opinion, this document is supposed to accurately reflect what money was spent. Even in the deficit, it reflected accurately what money was spent and where it went. Finance – 06/02/10 Page 27 Again, I think that problem stems back from okay who authorized those people to work, who authorized those purchase orders to go out when they should have known that those accounts were going down. It has nothing to do with the warrant in my opinion. Alderman Pressly If I understand you correctly then Alderman Clemons, it is not our role to check on this, it is the department heads’ role, and so you are comfortable. I am not planning to go through each item as some people are able to do. So you rely on the skills and the capability of each department head to have signed off on it, and you take that as accurate? You don’t review each item? Alderman Clemons I’m sorry I am not saying that I don’t review this, that I don’t look at it. I don’t spend hours on it. I do look at it, but at some level, like the Mayor said, you have to have some faith in your employees otherwise why do you have them? At that point then if you are going to be the one to go through the whole document then more power to you, but I think that on some level you have to say okay these are the people that we hired to do this job and to have this responsibility, if they are signing their reputation to it then I am going to back them up. That is where I come from. Alderman Pressly Thank you. Then I just wanted to clarify what is expected of me and what my responsibility is so thank you for the discussion. Alderman Deane We had two former school employees who I guess they didn’t need any character witnesses to back them up getting their job down in Massachusetts. The 5 digit commodity codes are supposed to be whole. There is supposed to be money in there to cover these costs. Alderman Clemons I agree. Alderman Deane When you read in the Charter, that is what it says. Alderman Clemons I agree. Alderman Deane For what went on in the school district had nothing to do with grants or revenue or anything else. Those people knew, they had to have known what they were doing. There is no doubt in my mind. You can blame the computer programs, the data, a decimal, you can blame whatever you want, they knew what was going on. There is no way they couldn’t have known that. Mayor Lozeau Well, Alderman Deane the reference that I made to seeing some of the numbers go in the red were certainly not to the degree of the deficit. They were small numbers … Finance – 06/02/10 Page 28 Alderman Deane But Mayor the… Mayor Lozeau I was just going to say that the big numbers that we ended up seeing at the end with payroll came too late to have saved … Alderman Deane When we sat in that illegal meeting at the hotel that Sunday, we were told that they had enough money to cover the costs of that contract. We were told that by Mealey and Hottel. We were told that. Mayor Lozeau I know. We all were yes. Alderman Pressly I didn’t intend to bring this up, but since the discussion has expanded a bit, being new I did the way I try to learn things, and I thought who are these two people and so I did request to have their resumes, and they were turned down initially. Mayor Lozeau Alderman Pressly, with all due respect, this is now out of the scope of this committee’s responsibility. Alderman Pressly Okay. Mayor Lozeau We are speaking specifically to these dollars. I brought up the issue so that you could appreciate the magnitude of what the warrant can be and the responsibility between what we do here and what the school does. Coming in as a new Mayor, it was made very clear to me very often, especially while putting my budget together, that I only had bottom line responsibility at the school department and did not have control over any line items. That plays into when I saw line items turning in the red I asked the questions that I should ask, but I was clearly reminded that until the bottom line had a problem I had no role there. Then in the end, when the problem happened even though some of us had waived a flag, I was told well now it is your responsibility, and I thought okay how do I reconcile those two things. So it is not my responsibility when they happen by line, but in the end when it happens it is. That has been something that I still struggle with, and so the way that I have overcome that is to work differently with the school and to put things in place that help my confidence level with some of that. When I raise flags again they will be raised a little bit higher. Alderman Deane It is like seeing a truck stalled on the railroad tracks and thinking I am going to get out and push it and the say no don’t bother pushing it, let the train hit the truck and then we will deal with it afterwards. Alderman Pressly May I just say I was in no way suggesting that you were responsible? Finance – 06/02/10 Page 29 Mayor Lozeau Oh no I know you weren’t. Alderman Pressly My situation is being new on this board and it is our job to sort of understand this, and I want to know what to look for to make sure I am not irresponsible or that I am supposed to be watching something that I don’t know to watch, and from what you have said we have hired capable department heads and we rely on their understanding their job and fulfilling it to what it is defined to be. Mayor Lozeau Clearly I am much more comfortable with the city staff that I have responsibility over than the ones that I do not. Having said that, those are questions we all ask ourselves. WARRANT MOTION BY ALDERMAN CLEMONS TO APPROVE WARRANT #22 IN THE TOTAL AMOUNT OF $10,770,961.70 OF WHICH $2,324,141.49 ARE ACCOUNTS PAYABLE, $5,244,110.66 ARE PAYROLL AMOUNTS, $2,023.90 ARE PREPAY AMOUNTS AND $3,200,685.65 ARE WIRE TRANSFERS MOTION CARRIED ADJOURNMENT MOTION BY ALDERMAN CHASSE TO ADJOURN MOTION CARRIED The Finance Committee meeting was adjourned at 8:12 p.m. Alderman-at-Large Ben Clemons Committee Clerk