Finance Committee

REPORT OF THE FINANCE COMMITTEE DECEMBER 17, 2014 A meeting of the Finance Committee was held on Wednesday, December 17, 2014, at 7:00 p.m. in the Aldermanic Chamber. Mayor Donnalee Lozeau, Chair, presided. Members of the Committee present: Alderman-at-Large Daniel T. Moriarty, Vice Chair Alderman-at-Large David W. Deane Alderman Ken Siegel Alderman Paul M. Chasse, Jr. Members not in Attendance: Alderman-at-Large Jim Donchess Alderwoman Pamela T. Brown Also in Attendance: John L. Griffin, CFO PUBLIC COMMENT - None COMMUNICATIONS From: John L. Griffin, Chief Financial Officer Re: Purchase of Ceremonial Uniform Equipment Requested by Police Department (Value: $41,550) MOTION BY ALDERMAN SIEGEL TO ACCEPT, PLACE ON FILE AND AUTHORIZE THE PURCHASE FROM RILEY’S SPORT SHOP IN THE AMOUNT OF $41,550. SOURCE OF FUNDING IS DEPARTMENT 150, POLICE; DEPARTMENT OF JUSTICE FORFEITURE FUND ON THE QUESTION Mayor Lozeau I would like to explain my vote. I am going to be voting against this measure tonight. I believe that these funds could be used for a purpose that would be more in keeping with the drug forfeiture funds. I don’t agree that we need 170 sets and that concerns me. That’s my reason for my no vote this evening. MOTION CARRIED From: John L. Griffin, Chief Financial Officer Re: Contract Renewal for Legislative Facilitator Services (Value: $14,000) MOTION BY ALDERMAN SIEGEL TO ACCEPT, PLACE ON FILE AND RENEW THE CONTRACT WITH DAVID ALUKONIS IN THE AMOUNT OF $14,000. FUNDS ARE AVAILABLE IN DEPARTMENT 101, MAYOR’S OFFICE; GENERAL FUND OPERATING BUDGET; 53, PROFESSIONAL AND TECHNICAL SERVICES ON THE QUESTION Alderman Chasse Is that same the same amount as we have been paying Maria? Finance – 12/17/14 Page 2 Mayor Lozeau It’s been the same amount since the beginning. Alderman Chasse It is good money spent. MOTION CARRIED From: John L. Griffin, Chief Financial Officer Re: Purchase of One 826K CAT Trash Compactor Requested by Solid Waste Department (Value: $746,817) MOTION BY ALDERMAN SIEGEL TO ACCEPT, PLACE ON FILE AND AUTHORIZE THE PURCHASE FROM MILTON CAT IN THE AMOUNT OF $746,817. SOURCE OF FUNDING IS FROM A BOND AS AUTHORIZED BY RESOLUTION R-14-091 ON THE QUESTION Alderman Deane The resolution that was put in here and made part of the agenda does not have your name on it. Mayor Lozeau I didn’t notice. Alderman Deane It doesn’t have any other co-sponsors names on it either. Mayor Lozeau Mine does. Alderman Siegel I did check the legislative history and it turns out the version of the legislation on-line is also lacking those co- sponsors. Mayor Lozeau The copy I have has the co-sponsors but not myself; but it does have the signature page that shows me signed off as a sponsor and signing off on the legislation. Mr. Griffin, can we make sure that we have the proper copy to go in with the file? Alderman Deane What’s the timeline on the documents that have to be sent to bond council for final approval on this because it wasn’t…I saw the documents that Ms. Lovering was putting together this afternoon and it didn’t seem that deep or that high in pages so I was wondering what the timeline was? Finance – 12/17/14 Page 3 Mayor Lozeau I know that the treasurer likes at least 30 days lead time at a minimum. I think he knows that we are trying to move as quickly forward with this as we can. Hopefully he can pull it off in 10-15 days. I don’t know that he will be successful but I think he is attempting to do it as quickly as he can. Alderman Deane So the 30 day minimum has now changed to 10-15 days? Mayor Lozeau I’m just saying that he likes a minimum of 30 days but I have spoken to him about this. I also wanted to take the opportunity to tell you that some of the bids have come in for the service contract that we have talked about having and so far from what we can tell, and the director is still doing a comparison to make sure that we are comparing apples to apples. It does look like Cats’ bid is probably the best bid and I think its $48,000 for 5 years. Alderman Deane So that will come in at a later date so we can review what we are getting? Mayor Lozeau Exactly and prior to the vehicle arriving. Alderman Deane Does the warranty on the vehicle start on delivery? Mayor Lozeau Yes, that is my understanding. Alderman Deane Is that spelled out in here? Mayor Lozeau I’m pretty sure it is. Alderman Deane We bought that extended warranty too, right? Mayor Lozeau Right, we did. Alderman Deane You know sometimes people try to sell you these extended warranties and it starts at the same time as the warranty that it comes with. Finance – 12/17/14 Page 4 Mayor Lozeau I don’t think that’s the case here. We spoke about it more than once as we were choosing this equipment. Alderman Deane For $29,000 we are getting an extended warranty for 12 months and an additional 8,000 hours or 84 months. Mayor Lozeau Right. Alderman Deane How would that work? Mayor Lozeau I think it’s based on additional…each of them are broken down for a duration. If you look at the power train, it’s 24 months. Alderman Deane But this is the bumper to bumper that we are buying; this includes everything. It states that it extends the 12 month bumper to bumper warranty an additional 8,000 hours or 840 days. Additional to what, hours accumulated over the first 12 months of ownership? Mayor Lozeau I don’t want to speculate and I can’t recall the conversation that we have had and I don’t see it on here. Mr. Griffin, do you see it? You don’t see it either. Alderman Deane Can we find that out? Mayor Lozeau We can, yes. What’s ringing a bell with me was the conversation that we had about it when we were first looking at this at BPW. Do you want to table it while we are finding out? Alderman Deane No, I think we can find out. Mayor Lozeau Okay, I’m just making sure. Alderman Deane We’ve got a piece of equipment down there that.. Finance – 12/17/14 Page 5 Mayor Lozeau Of course we will be talking about it with the service agreement as well because some things will be covered and some things won’t. We will make sure we spell it out. Alderman Deane What do you mean by some things? Mayor Lozeau If you are going to get a service contract there are items that are already under warranty that you wouldn’t pay for in a service contract. Alderman Deane The service contract is basically the preventative maintenance, not necessarily replacing parts. The initial bumper to bumper covers everything and then we bought another 8,000 hours or 840 days. MOTION CARRIED From: John L. Griffin, Chief Financial Officer Re: Three (3) Year Contract Award for Credit Card Processing Services (Estimated Value: $10,000) MOTION BY ALDERMAN SIEGEL TO ACCEPT, PLACE ON FILE AND, CONTINGENT UPON BOARD OF ALDERMEN APPROVAL, AWARD THE CONTRACT TO HEARTLAND PAYMENT SYSTEMS IN THE AMOUNT OF $10,000. FUNDS ARE AVAILABLE IN DEPARTMENT 166, PARKING; GENERAL FUND OPERATING BUDGET; 55, OTHER SERVICES ON THE QUESTION Mayor Lozeau This is the one that we had the legislation brought in to cover the costs and this contract, as we had hoped, comes in at half the cost of the vendor that we have been using. MOTION CARRIED From: John L. Griffin, Chief Financial Officer Re: Architectural Services – Change Order #1 (Value: $22,000) MOTION BY ALDERMAN SIEGEL TO ACCEPT, PLACE ON FILE AND APPROVE CHANGE ORDER #1 TO THE CONTRACT WITH TENANT WALLACE ARCHITECTS IN THE AMOUNT OF $22,000. SOURCE OF FUNDING IS DEPARTMENT 179, LIBRARY; CHANDLER MEMORIAL LIBRARY FUND ON THE QUESTION Alderman Deane We are both library trustees, Mayor. I have gone to some of them. Finance – 12/17/14 Page 6 Mayor Lozeau I went to the one that you didn’t go to that was after the one you did go to. Alderman Deane I am kind of glad that they are going in this direction. Anybody that has been down in the basement of that library in the east wing; there are a lot of limitations there. I think it is best that they focus on that. The library has changed, the services have changed, and the uses have changed so they are going to update it so that it gets current use and those that utilize they library get the best usage out of that space because right now that is not happening. It’s good to see that this is the decision they made. MOTION CARRIED UNFINISHED BUSINESS - None NEW BUSINESS – None DISCUSSION Alderman Moriarty A few people have been wondering what the heck has been going on with wastewater treatment plant with all of the negative press lately with the surprise sudden failures of a lot of different things. It seems like we would have people working full-time that would be able to see this coming and not leave us without heat and without the ability to process our wastewater. Mayor Lozeau We had a lot going on there. We have been talking about it, both in this committee and at the Board of Public Works. I think I told the Finance Committee or the full Board some time ago who we have put on the team to take a look at this. It’s a combination of things, it’s a combination of equipment that is at its end of life, some of which it would have been nice if we ordered it sooner rather than later. Others we are ordering as we should and we have had some failures based on some systems. We have our arms around it. It’s an old 1970’s treatment plant so some of these things are expected, some are unexpected, and some of them could have been planned for better. Alderman Moriarty So is it a combination of just the probability of things that are failing at the same time or is it that someone actually dropped the ball? Mayor Lozeau I am not going to have a discussion about employees and what they did or didn’t do. It is a combination of many things. As you know, there are more pumps in that building than most of us could probably count in an afternoon. They work 24x7 and they have to be replaced. A lot of the ones that we have been approving here in the Finance Committee are being bought ahead of time. Sometimes when you take one down the other is doing twice the work and it’s not long before that is a problem. I think we have our arms around what we are doing. We’ve met with DES and as the committee knows, they had some findings over at the facility. We were never out of compliance but there were some concerns raised. We responded to their concerns and I e-mailed that out to everybody. I think they are feeling pretty good about where we are going and what’s taking place there. The new superintendent is on board and I think we are in pretty good shape. Finance – 12/17/14 Page 7 Alderman Siegel Just FYI for my colleague, Alderman Moriarty, there is a BPW meeting tomorrow if it is something that you want to discuss there. It would probably be a better venue because there are just more people there that will be able to answer some questions if you had them. Alderman Deane I agree that there are a lot of moving components down there and there are things that fail. To me that facility is the most important asset in the city by far. We have no other alternative. That is the lone area for treatment so it’s not like we can turn a valve and send it somewhere else because that’s not the case. The upside of all of this is Weston & Sampson has come in and they are doing an analysis of the place. They have started replacing things like pumps, mixers, and motors. There is money set aside in the wastewater equipment reserve account to do this work and they are getting back on schedule. I think the staff has done a great job and as you alluded to earlier, Mayor, we have never been out of compliance. The deficiencies that they found are being addressed and DES was happy to see that. I am sure they will be coming back in to look at the progress and there has been progress made by approving the components that we need. How things happened; there’s no upside to discussion that. My theory is that I am looking forward to make sure that things are replaced. RECORD OF EXPENDITURES MOTION BY ALDERMAN SIEGEL THAT THE FINANCE COMMITTEE HAS COMPLIED WITH THE CITY CHARTER AND ORDINANCES PERTAINING TO THE RECORD OF EXPENDITURES FOR THE PERIOD NOVEMBER 27, 2014 TO DECEMBER 11, 2014 ON THE QUESTION Alderman Siegel There was an expense for the Telegraph under purchasing of $4,142.57 and when I inquired about this Mr. Griffin responded that some of this was for advertising for bids which I understand but some of it is for employment advertisement. It was my understanding that we weren’t going to be using newspaper hard copies for employment since that’s not typically where people go looking for jobs these days. Mayor Lozeau It’s actually a mix and we did not make the decision to not use the newspaper. Alderman Siegel I got my understanding from Mr. Gabriel, the previous purchasing manager. Mayor Lozeau I don’t know why he would give you that impression. Alderman Siegel Because he was the purchasing manager. Mayor Lozeau I understand that but he worked at the direction of myself and Mr. Griffin and the policy and procedures. HR is responsible for determining whether or not and where advertisement happens for employment and we use a Finance – 12/17/14 Page 8 mix of things. We’ve cut the purchasing budget because we have used significantly less advertising but we still use it. Alderman Siegel It was his feeling that it was cheaper to use something like Monster.com and more effective and that was a way that he was saving money but he’s no longer with us and it’s not his call. Mayor Lozeau It was a very different conversation that I had with Mr. Gabriel than what you did. Mr. Griffin I can shed some light on the use of the Telegraph for employment ads. That's what Mr. Gabriel had referred to as pointer ads so we actually placed the ad in the Telegraph and it points to the city’s website and along with the placement of that ad we get some days on Monster.com. That’s the strategy there. In some jobs, the feeling in some departments is that they need a bigger ad. Mr. Gabriel had worked with the school department pretty extensively and for some positions such as principals and assistant principal, the thought from that leadership was that a more prominent looking ad in a local newspaper was appropriate. Based on this discussion I could get the split of the $4,200 worth of advertising and I think it would be a lot less on the personnel ads and a lot more on the public notices but I could get that information. Alderman Siegel I appreciate that and in fact, it was the school department that Mr. Gabriel pointed out as explicitly spending more money than they needed to. He used the phrase “stuck in the 80’s with regard to advertising.” Again, I don’t control the policy; I’m just trying to look for ways to be effective looking at expenses. It’s not my call but I think it’s worth questioning whether it’s a good expense. Mayor Lozeau It’s not our call as it relates to the school either. For ours I think we have seen a dive in the cost. Alderman Siegel On page 33 under Benefits Self-Insurance Fund there are a number of items that were on the Citizen’s Bank credit card – Ticketmaster, BJ’s, Brookstone, Dick’s Sporting Goods, Dollar Tree Stores, Buckwheat’s, Seedlings Café, Amazon, and Sky Venture. When I inquired about these I was told that these were for an employee wellness conference. Mayor Lozeau It was the Employee Health Fair. Alderman Siegel Is this a regularly occurring event? Mayor Lozeau It’s an annual event. What you are seeing there are what HR and our healthcare provider will tell you are incentives to get employees to come to the health fair and benefit from their flu shot, testing their cholesterol and all kinds of different services that we provide there. Based on how many tables they visit they get raffle Finance – 12/17/14 Page 9 tickets and things like that. We budget for wellness and Anthem also contributes so we spend about $3,500 per year on the employee health fair. Alderman Siegel If we are budgeting for this, why isn’t there a budget item? To me, the Benefits Self-Insurance fund doesn’t encompass raffle items, I think it benefits self-insurance. Mayor Lozeau It encompasses wellness and part of wellness is the health care fair and part of that is getting employees willing to go the health fair. We do budget for wellness; we have a line item in the budget for it. Alderman Siegel That would be in the budgetary line item and not Benefit Self-Insurance, would that be correct? Mr. Griffin The appropriation from the general fund is the total of that fund which, subject to check, is about $25.6 million in FY 15’. When I went through the budget process there is a page that delineates some of the line items associated with that such as claims, policies, the administration of claims and one of the items which is account #52809 is the wellness line that typically has about $50,000 in there. The sum of all of those accounts that I just mentioned is the cost and the revenue is the employer contribution which is the appropriation, the employee contributions to their choice of healthcare plan and some rebate opportunities such as Medicare rebates, prescription drug rebates, etc. The sum of all of that is the management of that fund. Alderman Deane Mr. Griffin, the $50,000 you just mentioned, that’s what is budgeted in that $25.6 million? Mr. Griffin It had historically been at $50,000. My quick review of that earlier today; I believe it’s about $34,000 that is really budgeted and then there are expenses such as the expenses that we are talking about now that drive down on that account. Alderman Deane Other than the $1,800 that was spent out of the $34,000; not the $50,000; what’s that other $32,000 going to be spent on or what is it earmarked for? Mr. Griffin I’d have to check with HR but they from time to time provide other opportunities to educate retirees, staff, and employee subscribers on certain wellness programs such as smoking cessation, weight loss, eating healthy, etc. Alderman Deane Can we go back and look at historic expenditures out of it? Mr. Griffin Yes. Finance – 12/17/14 Page 10 Alderman Deane What’s that line item? Mr. Griffin The specific account is 52809 and the two-digit is in the Self-Insurance Fund so it’s 6600. Alderman Siegel I understand the purpose of wellness programs because they reduce our insurance cost so there’s not actually a cost associated with the wellness program per se and that’s why so companies do which is fine. The issue I have here is that we are buying raffle items out of the Self-Insurance Fund. I think that goes too far. The wellness program is health education, gym memberships, and nutritional counseling; it’s not raffle items. It’s distressing to me and it doesn’t seem like the right way to spend our money. Mayor Lozeau This is based on the recommendation of HR, the benefits staff, and the healthcare staff because we were trying to find ways to have the employees come to the health fair. We had record number increases over the past four years. We have vendors that come and its small money for a big impact. I would put our healthcare choices that we have done in the last several years against any other community in the state. We see the dividends from different choices that employees are making, some which is because we have educated them on things, some because of targeting specific things because we can that we spend a lot of money on cholesterol drugs so okay, what can we do to change that? We target things at the health fair and we reach out to specific employees to try to get them involved in different things. $3,500 per year for all of the vendors plus the volunteers to spend the day there, I think it has worked out pretty well. Alderman Siegel Again, I have no issue with the fair per se but our discounts come from having a wellness program in place. The people that are going to be motivated to come this fair only because we are giving away raffle items are not likely to be the ones that on the other 364 days a year are taking care of themselves. Mayor Lozeau I don’t think that’s a fair characterization. Alderman Siegel A fair characterization in my opinion is that I don’t think this is an appropriate way to spend the city’s money on raffle items. Mayor Lozeau Understood. Alderman Moriarty BAE recently instituted a wellness plan and served on the council for about two years and basically created a wellness program from the ground up. Raffle items are typical. People like to go to a fair and you go in and you get swag. I think it’s perfectly fine and I think we should spend more time on wellness and it would be a great idea if we could get each of the different collective bargaining units to institute it also. In your defense, I do think it’s a great idea. Finance – 12/17/14 Page 11 Mayor Lozeau I do think it’s been successful. People are very competitive by nature so it’s set up as a way to get to every vendor. Alderman Siegel Is it the wellness that you are all in favor of or the giving away of raffle items with the Benefits Self-Insurance fund that you are in favor of or both? Alderman Moriarty I am in favor of the wellness program and from my experience, having been part of it for several years for a large Fortune 500 company, the bottom line is tactics and strategies. The tactics tend to include things like raffle items. So the answer is yes to both. Alderman Siegel As someone who has set up wellness programs in my own company’s I guess we will just part company on that. MOTION CARRIED PUBLIC COMMENT - None POSSIBLE NON-PUBLIC SESSION - None ADJOURNMENT MOTION BY ALDERMAN CHASSE TO ADJOURN MOTION CARRIED The Finance Committee meeting was adjourned at 7:35 p.m. Alderman Ken Siegel Committee Clerk