Board of Finance - Minutes - 02/14/2024

FIFTEEN ROPE FERRY ROAD
WATERFORD, CT 06385-2886
Board of Finance
Regular Meeting Minutes
PHONE: 860-442-0553
www.waterfordct.org
Present: Glenn Patterson, Bill Sheehan, Ronald Fedor, Robert Tuneski, David Peabody, Michael
Rocchetti
Absent: Joseph Filippetti
Elected: Rob Brule, First Selectman; Abbas Danesh, Treasurer; Paul Goldstein, RTM
Staff: Kimberly Allen, Director of Finance; Lieutenant David Ferland, Police Department; Linda
Finnegan, Office Coordinator, Fire Services; Jonathan Mullen, Planning Director; Rebecca
Hall, Admin Assistant Finance Office/BOF Recording Secretary
Establishment of a quorum and call to order
A quorum was established and the Regular Meeting of the Board of Finance was
called to order at 7:00 p.m. February 14, 2024.
Approval and acceptance of minutes:
Regular Meeting on January 10, 2024
Motion by Bill Sheehan and seconded by Dave Peabody to approve the minutes of the January
10, 2024 Regular Meeting.
Vote: 6-0-0 Motion Passed.
Public Comment: none
Discussion to consider and act on the request by Marc Ballestracci, Chief of Police, for
additional appropriation for one (1) employee payout that is required under the current
collective bargaining agreement in the amount of $34,063 to Line Item 10129-51420 (Patrol).
Motion by Bill Sheehan and seconded by Ronald Fedor to approve the transfer of $34,063 from
Contingency line 10121-59010 to Line item 10129-51420.
Vote: 6-0-0 Motion Passed.

Board of Finance Minutes, 2/14/2024
Page 2
5.
Discussion to consider and act on the request by Michael Howley, Director of Fire Services, for
an Out-of-Series transfer for numerous unexpected repairs for the amount of $18,595. Ron
Fedor noted he is voting against this request as there is insufficient detail to the request
presented to the Board of Finance at the time of the meeting. He also noted that there seems
to be frequent transfer requests for numerous equipment repairs from Fire Services monthly.
Fedor, Bill Sheehan, Michael Rocchetti, and David Peabody all brought up questions regarding
the fleet repair tracking and future maintenance to Linda Finnegan, Office Coordinator of Fire
Services as the director was absent from the meeting. Kimberly Allen stated that we are ahead
of the National Fire Standards for replacing most of our apparatus based on number of calls.
Rob Brule shared that Director Howley has developed a spreadsheet for tracking all repairs and
maintenance of fire service vehicles but the document was not shared with the board for this
request, Robert Tuneski noted the value of that type of document for fire services to help
project costs more accurately and capture history of repairs for each vehicle. Ron Fedor
expressed concern regarding the number of repairs to vehicles instigating a necessity to create
@ separate document from the town’s existing Fleet Plan. The board, overall, believes more
detail from Director Howley that aligns with the current Fleet Plan will assist the board in
making the best decisions on transfer requests in the future.
TOWN OF WATERFORD.
TRANSFER REQUEST FORM
Out of Series Transfer Request
APPROVED CURRENT ACCOUNT. ACCOUNT. REWSED
exptanaton
Dudoet —“Avalable INCREASE | OEGREARS,
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1 20123 52075 [Lasser Tontng & Repatn, 7.900 2207 2277
2 20123 32179 Irene Tentng€ Reps 9925 763 ay
2 sous 52200 [vets seen Anaranaes bass 2359]
* 30123 52173, |Fxe pases 3250] 3.250] 0.250
A 30123 54222 |rasove Toss 00] sn 5.412)
n 10123 54226 1 6.000) 471 war
z 30128 ‘207 eving 4000) 2200] os 30
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Tor Tass Tasos)
58 There nave bean umeroun unerpecie bi ns op Wie EY your
Motion by Bill Sheehan and seconded by Michael Rocchetti to decrease line items #10123-
52375, -52379, -52290, -52371, -54222, - 54226, -52387 and increase line item # 10123-53070
by $18,595.
Vote: 5-1 (Fedor)-0 Motion Passed,

Board of Finance Minutes, 2/14/2024
Page 3
6. Discussion to consider and act on the request by Jonathan Mullen, Planning Director, for an
Out-of-Series transfer for an increase of fuel usage for the amount of $1000.
TOWN OF WATERFORD
TRANSFER REQUEST FORM
‘Out of Sees Transfer Request
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Motion by Ron Fedor and seconded by Michael Rocchetti to decrease line item #10118-52030
{Professional Fees) and increase line item # 10118-53090(Fuels & Lubricants) by $1,000.
Vote: 6-0-0 Motion Passed.
7. Discussion to consider and act on an additional appropriation request by Kimberly Allen,
Director of Finance, for wage increases previously approved in the FY24 budget in the amount
of $2887 as follows: $330 to line 10107-51010 (Elected Officials), $2,394 to line 10107-51110
(Administration), $163 to line 10107-51920 (FICA).
Motion by Bill Sheehan and seconded by Robert Tuneski to transfer $2887 from Contingency to
line items as follows: $330 to line 10107-51010 (Elected Officials), $2,394 to line 10107-51110
(Administration), $163 to line 10107-51920 (FICA).
Vote: 6-0-0 Motion Passed.
8. Discussion of FY23 Audit, including “Questions & Comments” by Bill Sheehan along with
“Highlights” of the audit. Bill Sheehan brought up several highlights of the FY23 Audit (see
attached).
9. Old Business:
Chairman, Glenn Patterson reminded the members of the board that they still have the Fund
Balance percentage to consider while looking through Capital Improvement Budgets in the next
month.

Board of Finance Minutes, 2/14/2024
Page 4
10.
41.
12.
13.
New Business:
Bill Sheehan asked Rob Brule if there are any plans for the Town of Waterford to establish a
composting pickup like some other towns have already done. He suggested a potential town
composting location could be the old landfill site. Some research would be needed for the types
of bags used and frequency of pickup. Rob Brule stated he will discuss with Gary Schneider,
Director of Public Works.
Liaison Reports.
a, Oswegatchie Fire House Building Committee: Rob Tuneski reported that the committee
is moving along well with the plans for the new facility. The funding for the architect was
approved through all levels of the town. The next step will be signing a lease agreement
with the volunteers which will likely be done by April 2024.
Correspondence
3. Abbas Danesh, Town Treasurer, Quarterly Treasurer's Report ending 12/31/2023.
Chairman Glenn Patterson noted specific funds and investments and discussed the
Hammond Fund,
b. Virginia Bielucki, Town Accountant, Periodic Financial Statements FY24 dated December
31, 2023,
©. Virginia Bielucki, Town Accountant, Status of General Fund Unassigned Balance dated
January 12, 2024,
Virginia Bielucki, Town Accountant, Status of Contingency FY24 dated January 19, 2024,
December 2023 Special Revenue Reports
USS. Treasury Quarterly Report
Cathryn Girard Letter, Electronic Enforcement of Traffic Violations, “Vision Zero”. Bill
Sheehan asked Rob Brule if the town had plans to consider “Vision Zero” to which Rob
responded that Marc Ballestracci, Chief of Police, is looking into further.
h. Kimberly Allen, Director of Finance, FY24 Project Status Report for the Quarter Ending
December 31, 2023. Glenn Patterson noted he would be sending questions about the
Capital Project Status Report to the First Selectman and Finance Director and he would
include all BOF members on distribution,
empe
Adjournment
Motion by Bill Sheehan and seconded by Michael Rocchetti to adjourn the Regular Meeting of
the Board of Finance at 8:24 p.m.
Vote: 6-0-0 Motion passed.
Respectfully submitted,
Johf (Bill) W. Sheehan, Rebecca L. Hall, .
Clerk of the Board of Finance Board of Finance Recording Secretary

FY2023 Audit Highlights by Bill Sheehan
State and Federal Special Report Letters
1. Federal Single Audit Report was a clean report for FY2023. The Federal letter had the usual
discussion of Internal Controls and the limitation of the Audit regarding the “...effectiveness of internal
control over compliance”.
2. Total Federal Expenditures for FY2023 were $4,342,973. The largest single Department source was
the Department of Education at $2,443,230. The next highest was Department of the Treasury at
$966,080. Most of the Treasury funding as the from the ARPA. The Department of Agriculture provided
$715,050 for the School Lunch Program.
3. As is usual, the Town got a clean report with no noncompliant issues in the state audit. | always have
to smile when every such audit includes the statement “Our audit was not designed for the purpose of
expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such
opinion is expressed.” Then the report says “The purpose of this report in internal control over
compliance is solely to describe the scope of our testing of internal control over compliance and the
results of that testing based on the requirements of the State Single Audit act. Accordingly, this report
is not suitable for any other purpose.” This statement comes after two- and one-half pages describing
internal control compliance.
4. Total State revenues = $2,797,537 in FY23, down from $3,673,564 in FY2022 up from $2,075,683 in
FY2021 up from $1,848,603 down from $2,446,421 in FY2020 down slightly from $2,489,647 in FY2018
which was down from $4,830,177 in FY2017. Increase in FY2017 was in School Construction Grants.
FY2022 increase appeared to be from a LOTCIP grant of $1,580,345 to Public Works.
5. Grant that | just noticed after all the years doing this report — Which Department uses the Medicaid
Grant from the Department of Social Services? Page 4 of State Single Audit. ($30,252 in FY2023, $124,
194 in FY2022, $62,310 in FY2021 and $52,714 in FY2020). | asked this question last year and | do not
remember the answer.
6. As usual, the Auditors noted that the Expenditures in the report are presented on the modified
accrual basis of accounting.
7. No Findings or Questioned Costs found in the State Single Audit Report
‘Management Letters Comments
1. No observations or negative comments were in the FY2023 Management Letter or Audit Check Off
List. This was also true in the FY2022 and FY2021 Management letters and Audit Check off lists. Unlike
the FY20 Audit letter, there were no recommendations for improved Internal Controls.
2. In FY20, however, the Auditors did have some recommendations regarding Internal Controls: a.
Initiate a regular review of employee listing and the payroll system change logs by an employee of the
HR department to insure there are no false employees, individuals not removed upon termination, or
unapproved changes to pay rates.
b. Establish a formal Whistleblower policy and tip line, especially for employees, to report fraud or
inconsistencies in the Town.
¢. Establish the practice of having Town employees and elected officials sign a formal log
acknowledging their understanding of the Ethics policies of the Town. | informed the RTM L&A
committee of this comment during the public hearing on the revision to the Ethics Ordinance. The
committee determined that the requirement for employees and public officials to sign acknowledging
receipt of a copy of the Ethics ordinance was sufficient. The Ordinance would rely on the Human
Resources Department and Town Clerk to administer such a sign in log.
d. Town should perform a risk assessment to identify, analyze and manage the risk of asset
misappropriation. This should be an element of Town Internal Controls. This assessment can be
performed by an outside agency or a management level individual who has extensive knowledge of the
Town that might be used in the assessment.

e. The Town must be proactive in assessing and managing operations and IT environments in
anticipation of cyber threats. The recommendations are lengthy and | recommend all members réad
them to see what financial investments might be requested by the administration to implement the
recommendations.
f. The Auditors also reviewed the specific security of the financial management systems and the letter
notes seven recommendations that are still outstanding: i. Perform regular format tests of backup data
ii. Implement formal wire transfer procedures
iii, Evaluate and ensure PCI (personal/confidential information) compliance
3. Has the Finance Department implemented all of the recommendation of the FY2020 audit or
explained why the recommendation was not implemented?
Comprehensive Financial Report
1. A Comprehensive Financial Report (CAFR) provides additional statistical information that is very
useful in understanding what a municipal government does for its municipality.
2. The Profile of Government on pages i and ii does not include the four-year term for the members of
the Board of Finance.
3. Excellent summary of Economic Activity in Town on Pages
4. The paragraph on Long Term Financial Planning needs to be corrected to include the fact that the
RTM formed a Planning Committee that superseded the BOF Committee in CY 2013 (October 7, 2013
RTM meeting). Also, the RTM Committee established in 1998 went out of business after the release of
the Government Consulting Group Report in CY2001. That is why the BOF formed its committee in
FY2001. A similar comment was in the Review of the FY2022 report, the FY 2021 report, the FY2020
Report and the FY2019 report. Page ili
5. Note the Unassigned Fund Balance discussion. Page ili
6. The Organization Chart on Page iii does not reflect the titles of one of the Town Officials on page iv.
Also, the “reports to” lines need to be changed to reflect what is actually the current chain of
command in Waterford Town Government. Page v-vi. A similar comment was in my review of the
FY2022 audit report.
7. The Auditor's report explained how they conducted the Audit of the Financial Statements provided
by the Town noting what they reviewed and what they did not review. Key paragraph is the Opinion
that the Financial Statements were”... in accordance with accounting principles generally accepted in
the United States of America.” Pages 8-9
8. In the conclusion of the Auditor Report, the Auditors again state that the report is not an opinion
“on the effectiveness of the Town..internal control over financial reporting or on compliance” In
plain English, What they looked at was correct but that does not mean there are no errors in places
where they did not look. Page 11.
9. In FY2023 the Town’s net position decreased as a result of the year's operations. The governmental
activities increased by $280 thousand and business type activities decreased by $973.0 thousand
Expenses were $5 million less than the $111.5 million generated by taxes and other revenues for
government programs. Page 12
10. In FY2023 expenses were $691 thousand more than the $125.7 million generated in tax and other
revenues for governmental programs Page 12
11, Overall, in FY2023 the operating results increased the General Fund Balance by $3.4 million. Page
12.
12, Good explanation of town financial activities and categories of Town funds is found Pages 12, 13
and 14, This is highly recommended reading.
13. Note that the Board of Finance does not establish funds “..to help control and manage money...” as
stated in the paragraph after “Fund Financial Statements”. The RTM establishes the funds, generally as
recommended by the Board of Finance. Page 13

14, Note that Town Funds use the modified accrual accounting method so there is a difference
between governmental activities and governmental funds. This difference is described in a
reconciliation included with the fund statements. Page 13.
15. Town cannot use fiduciary net assets to finance operations. Page 14
16. Government activities revenue sources — 80.1% from property taxes, 14.5% form operating and
capital grants and contributions, 3.0% from charges for services and 2.4% from investment and other
general revenues in FY 2023 .
17. Note the factors affecting operations outlined on Pages 15 & 16
18. As usual, a good presentation of major factors affecting the FY23 operating budget. Pages 18 and
19.
19. There were $234.4 thousand of outstanding encumbrances at end of FY23. Encumbrances are
reported as expenditures for budgetary purposes. Page 19
20. Town debt at end of FY23 was $61.7 million. Town debt rating is “AA” from Standard and Poor's in
FY22 Page 20
21, The Unassigned Fund Balance increased by$3.1 million in FY23. Page 21
22. Total Cash, cash equivalents, and investments at end of FY23 was $68,298,427 in the Audit. The
Treasurer's report for 06/30/2023 showed a value of $68,429,949. Page 23
23. Total Cash and Investments in the General Fund for FY23 was $36,277,279. The 06/30/2023
Treasurer's Report reported a total of $37,641,129 of Cash and Investments in the General Fund. Page
25.
24. Long Term Liabilities not reported in the funds at end of FY23 were $163,247,882. Page 26
25. Note that the Net Pension Liability is $37,159,387, Compensated absences is $$199,000 and Net
OPEB liability is $19,564,900 in FY23. Page 26
26. General Fund Balance at end of FY23 was $26,468,631 ($37,641,129 in Treasurer's report), Capital
and Nonrecurring Fund Balance at end of FY23 was $$10,252,907 ($10,912,060 cash in Treasurer's
report). Page 27
27. Note the explanations for the differences in amounts reported for government activities on page28
28. The combined Retirement and OPEB Trust funds ended FY23 with a balance of $11,054,113. Unlike
FY22, FY23 was a good year for investments. Page 33,
29. It is important to understand the accounting policies discussed on pages 34-45.
30, Note that revenues are recorded when earned and expenses are recorded when a liability is
incurred regardless of the timing of the related cash flows. Page 25,
31. Generally, expenditures are recorded when a liability is incurred. However, debt service
expenditures as well as expenditures related capital leases, compensated absences, claims and
judgements are recorded when payment is due. Page 36
32, Note the rules on interfund activity described on Page 37
33. Note the depreciation table on page 39 for all physical property and equipment.
34, The Section on Leases was new in FY22 due to GASB 87 Pages 39-41
35. Note discussion of Deferred Outflows/inflows related to OPEB funds on Page 41-42.
36. Fund balance terms explained on pages 43-44, (GASB 54 implementation)
37. In budget discussion on page 46, the appeals process time lines are in the Town Charter, not Town
Ordinances. This error was also in the FY22, FY21, FY20, FY19 and FY18 reports.
38. The Section on Leases was new in FY2022. What has been leased? Page 51
39, Membership in the Town Retirement Plan is down to 7 persons in FY23 and FY22. Page 60
40. The Audit says that the Town has recorded $0 as long-term liability to MERS at end of FY23. $536
was long-term liability to MERS at end of FY22Are those correct numbers? Page 69
41, Membership in the OPEB retirement plan is 486 as of July 1, 2022. Page 77
42, The Net OPEB liability that is recognized as of June 30, 2023 is $19,564,899. Note that because the
total OPEB liability in FY23 is $30,109,553 up from FY22 total OPEB Liability of $26,048,033 up from the

FY21 total OPEB liability of $25,755,778 the Plan fiduciary net position percentage of total OPEB
liability is only 35.02% in FY23 up from 32.45% in FY22. Page 78
43. For a defined benefit plan it is considered “fully funded” if the funding status is 100% which means
there is enough money to cover any liabilities. If the fund is 80% funded it is considered “Healthy”. In
reality, the average funding status is 69.9%. Sourced from “THE NEST” “What is a Fully Funded
Retirement Plan”.
44. Note discussion on Risk Management on Pages 89. Stop Loss is discussed on Page 89. This is
important in funding Health Care Plans
45. The total returned funds for the Town and Board of Education was $1,302,293 at end of FY23. Page
98
46. Comparing expenditure total on Pages 99 with revenue total on page 93 Revenue was $2,622,475
greater than expenses in FY23
47. The major difference between the budgetary and GAAP basis is that encumbrances are recognized
as a charge against a budget appropriation in the year in which the purchase order is issued so that
encumbrances outstanding at year end are recorded in budgetary reports as expenditures of the
current year while in GAAP basis encumbrances are recorded as assigned fund balance. Page 99
48. Carefully review the MERS retirement plan data and the Teachers Retirement Fund Data. The Town
is fortunate that it is not paying for the Teachers retirement fund as well as the MERF. Pages 101-105
49. The Town has been fortunate that the tax collection rate continues to be greater than 99% and the
Town has been successful in collecting back taxes. Page 114 and Page 145
50. Review the explanation of the Special Revenue funds on pages 118 to 120. Then see how the funds
are expended. Pages 121-131
51. The Statistical Data on pages 137-153 are valuable information on the Town and well worth
spending some time reviewing to see how the Town as changed in the past ten years.