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Minutes of the Town of Hingham
Capital Outlay Committee Meeting
7/14/2011 at Town Office Building
Attending: Chairman Ray Eisenbies, Libby Claypoole, Lucy Hancock, Tom Pyles and Ron Kirven (both representing the Advisory Committee), Sue Nickerson (Town Accountant)
Ray Eisenbies called the meeting to order at 7:30 PM in the 3rd Floor East Hearing Room.
Method of Forecasting Capital Expenditures
The primary agenda item was a discussion of how the Town forecasts capital expenditures. Dennis Friedman (Advisory Committee) attended the meeting and presented some possible changes in the forecasting process. We need to eliminate or reduce surprises in requests for capital expenditures, especially for big-ticket items. It is essential that the Town have a more accurate forecast of the long-term assets. This applies across all departments. We are already doing this with the Police and Fire Departments, to some extent. Perhaps we need a revised policy for the COC. We should look for alternative funding sources for capital projects, e.g., meals tax, debt exclusion, targeted savings. Note that the Finance Department determines if an item qualifies as a debt exclusion.
The annual review of capital expenditures could occur earlier in the budget cycle, i.e., in October or November. Large capital projects include buildings, equipment, roads, and possibly athletic fields. The COC should target the departments that have such projects and work with them to improve and accelerate the budget process. We should compare department 5-year budgets from year to year, identify items that disappear or move, and find out the reason(s) for the change.
How can we validate the forecast numbers on the department budgets? It takes work to value the inventory. First we need an accurate inventory of assets and components, including purchase / installation dates and costs. We could start with the new buildings in town because we know the age / costs.
The COC can approach this challenge incrementally. Here are some next steps:
1) Review the last engineering study done by Gale Associates (8-10 years ago). (Sue will provide.)
2) Review the current inventory (fixed asset list) for the Town. (Sue will provide.)
3) Talk with Roger Fernandes about his opinion of the inventory.
4) Look at the buildings constructed since the last Gale study.
5) Consider a materiality threshold for which long-term forecasts are necessary.
6) Get feedback from Ted (Town Administrator).
7) Identify the departments most impacted by large capital projects and determine how and when to approach them on this topic. Ask Sue and Ted to solicit department heads informally.
8) In preparation for an inventory valuation, identify the appropriate assets and components and determine how far in the future forecasts should extend (10 years? 15 years?).
Libby will work on a draft approach for this process.
Other Business
COC members approved the minutes as amended from the 3/15/2011 meeting.
Sue advised committee members that ethics training is mandated by the town and must be completed every two years. The online training is available at www.mass.gov/ethics. Upon completion, people are to complete the Acknowledgement of Receipt and the certificate of completion and send these documents to Lynn Phillips.
The meeting was adjourned at 9:00 PM.
Respectfully submitted,
Lucy Hancock, Secretary