WESTFIELD – Mayor Daniel M. Knapik is preparing to transition out of the city’s executive office as his three-term tenure as the Mayor of Westfield draws to a close and he feels confident about the status of the city’s current finance position and level of services.
One of the most recent accomplishments is the institution of single-stream recycling, which appears to have been embraced by city residents since its January launch.
“It’s a good story that we were able to pull it off in the worst of this winter. It works and should only get better with the good weather,” Knapik said. “It was definitely something on my list of things to get done when I took office six years ago.”
“It took some time to get all of the pieces into place. The biggest challenge was getting enough of the right trucks to do this,” Knapik said. “When I came into office, I had no idea how bad the condition of the original fleet of solid waste trucks was. The new generation of trucks we have now has been working out sweetly.”
Evidence that residents have embraced single stream recycling is tonnage data indicating a drop in solid waste and in increase in the volume of recycled material. The data, comparing January and February of 2014 to 2015 shows a decline in trash from 1,667 tons to 1,298 tons resulting in savings of $18,163 over that period despite a hauling rate increase per ton from $56.65 to $58.35.
The recycling program shows the converse, a significant increase in tonnage from 197 tons in January 2014 to 221 tons this past January and from 144 tons in February 2014 to 202 tons last month.
The city’s financial status was recently endorse by Standard & Poor’s Rating Service which issued a SP-1+ short-term borrowing rating and affirmed the city’s AA long-term bond rating.
“That’s the highest short term rating you can get,” Knapik said. “We are financing a number of projects through short term borrowing on a one-year BAN (bond authorization note) with an interest rate on the BAN of .18 percent. So that is all good news. We heard from them just last week.”
The $13 million ban will be converted to traditional bonds when the projects are complete. Several of the projects have or will be done by enterprise departments, such as the Water Resource Department, which pay down the bonds through revenue collected through rates and fees.
The $13,168,500 ban includes $1 million for roadway improvements, $300,000 for the Granville raw water line replacement, $2,350,000 for repairs and improvements to the Granville Reservoir dam, $1.2 million for energy improvements at the city’s two high schools, $6.8 million for construction of the senior citizen center at the Mary Noble Estate, $518,500 for road improvement design and engineering work and $1 million for water main replacement.
Standard & Poor did report two concerns in the city’s financial position. One issue is the looming $300 million liability of Other Post Employment Benefits (OPEB) and the other is the use of stabilization funds to offset the tax levy.
“The rating companies encourage use of stabilization funds for one-time capital improvement projects and purchases, but discourage a continued draw down on the reserve fund for other (recurring) issues, such as the tax levy offset,” Knapik said.
“They also told us we have to start addressing OPEB,” Knapik said.
Knapik established an OPEB working group, comprised of 16 members including representatives of the city’s unions, which evaluated seven options to address the city’s OPEB liability. The group supported four of the proposals and rejected the remaining options.
The board voted 12-3 to appropriate a percentage of free cash, certified by the state Department of Revenue typically in November or December, directly to the OPEB trust fund. That option requires the support of the mayor and City Council.
The work group voted 11-4 to “re-acquire” the city’s retired teachers from the state Group Insurance Commission (GIC) and having the retired teacher participate in the same health care insurance program offered to other retired city employees. That option requires negotiation with the teacher union and City Council approval.
The GIC health insurance pays 85 percent of the cost of health insurance for retired teachers who are responsible for funding 15 percent of that cost, while the city pays 65 percent of health insurance for other municipal employees who are responsible for 35 percent of that cost.
The group also voted 9-6 to make OPEB a line item in the city’s annual budget, a step which has to be requested by the mayor and approved by the City Council.
The fourth option, approved by a 10-6 vote, would be to declare a health insurance holiday for one month and divert the premium, included in the annual budget, into the OPEB truck fund.
Knapik said that he would send a request to the City Council to review the OPEB options and take action accordingly.
Another key financial element of the city’s financial position is debt service which is currently about $7 million a year. The City Council has informally adopted a policy, created by former Finance Committee chairmen John Liptak and Richard E. Onofrey Jr., to maintain a debt service between $6 and $7 million a year to preserve that capability because once that money has been moved to the city’s operational budget, it is difficult to recover without laying off employees because salaries acco9unt for more than 80 percent of the annual budget
Knapik said that the current debt drops significantly over the next several years, unless more debt is added, and that by 2021 would be just slight more than $5 million.
“The policy of the City Council has been to keep that number between $6 and $7 million, that is the sweet spot,” Knapik said. “Once it’s in the budget, it’s hard to get back.”
