Black text is mostly objective, red text is mostly subjective in nature.
Monday was the Arlington Budget and Revenue Task Force meeting; tonight was the first Finance Committee of the year. I have a notes from both here.
At Monday’s meeting, it started with better-than-usual news that the Governor’s proposed budget had more money for Arlington than originally anticipated, and a couple other numbers had updated in the right direction. In total, the town is $2.5M better off next year than it thought. That’s still a bad year, but not as bad.
The most interesting part of the meeting was watching the Town Manager and Annie LaCourt grill the state legislators (all four were there) about how they’d help Arlington get into the GIC. The Manager is proposing a home-rule petition that will force the unions into the GIC if certain conditions are met, specifically if we get an actuary to certify that the employees are actually getting benefit at the end of the day. If we get the actuary to say that the deal is a financial win for employees, we’d force them into the GIC. Annie asked them yes or no if they’d help us. Will Brownsberger said yes – not an ounce of ambiguity. Kaufman and Garballey both said a lot of words that might have been yes, but there was a lot of “no” in them too. Donnelly thinks there should be an arbitrator – a death knell if there ever was one. When pressed, he agreed to the Manager’s home rule proposal. I frankly doubt he knew what he was saying. Given his past statements on the issue, I would be shocked if he actually agreed.
The second most interesting part of the meeting on Monday was the school department. They said that their deficit was reduced from $6.8 to $4 million. At that level, they might lay off 25% of the teachers. Other members of the task force pressed for more detail, specifically around snow removal costs, substitute teachers, grant money, and declines in fee revenue. The details were unavailable. My read on this is that the school numbers are weak. Very soft. Not on solid ground. Example: they say that the snow removal costs will cause cuts in ’11, but are unable to say how much they paid for snow removal in ’09. Really? It just started snowing this year? I’m betting that it’s always been paid for, they just haven’t figure out which bucket it came out of. The question then becomes, why are they circulating such weak numbers? I think there’s a few things going on. First off, it’s a brand-new CFO, and she’d rather be more conservative than not. Second, it’s an interim Superintendant, same conservative bias. In that case you’d hope the School Committee would call them to task and ask them to be more realistic in their predictions. Sadly, the school committee is paralyzed by other issues and doesn’t have the political will to challenge the numbers. The result is some very scary numbers that I think will not be sustained in future, more detailed budgeting.
The summary is that the draft budget has an increase of 1.1%. Once fixed costs etc. are applied, that results in a 2.5% decrease in departmental budgets. The budget does use some reserves to prop the budget up, including the end of the savings from the now-expired 5-year plan. He noted that ;ocal receipts revenue is budgeted at a 10% increase, based on good experience in the current year.
He hopes on Feb 22 have a list of add backs in light of the Governor’s budget (see notes from Monday).
He reviewed the GIC issue. He noted that basic level of going into the GIC includes higher co-pays and premiums, and the town would cover that no question asked. Even after that, there is $5M in savings. The town is offering to give part of that savings to employees – win-win. But the teachers union is still backing out. So we’re going to do a home rule petition where we can force the unions into the GIC if certain conditions are met, specifically if we get an actuary to certify that the employees are actually getting benefit at the end of the day. If we get the actuary to say that the deal is a financial win for employees, we’d force them into the GIC. Of course, teh state legislature may act without the home rule, including permitting truly unilateral action into the GIC.
We have no contracts for FY10. Police ranking officers just got an agreement (not ratified) at a 0% increase.
The Manager made the case that the town has made brutal cuts in personnel already over the last decade. He also notes that the town has grown at a smaller pace than the schools for each year in the five year plan, and that will happen this year too. He has heard calls to cut the town to save the schools, and he will do what he can and resist the rest. He said that public safety had reached the lowest point that safety permits.
Last year Town Meeting had a request to look at PAYT. He has a proposal that will save us $500,000 if town meeting approves. There was a discussion about the revenue from that program and what it might be.
He reviewed the cuts in the budget. Youth Services got a fair amount of discussion. They lost the schools revenue last year, and they need to go after Medicaid etc. as a new revenue source. There are a lot of layoffs there. Some people think we should fund it while the department is rebuilt on a model that is closer to self-sustaining. The Manager thinks he’s leaving enough money for the department to rebuild.
Public Safety – these cuts will result in lower minimum manning. Some police shifts under minimum manning – won’t backfill with overtime. It also removed captain, less administration and internal affairs etc. Fire dept has some manning options using the quint so that it has a less impact on service levels – some, but not so much. Maybe take a piece out of service intermittently during off-times in the summer. Police has 11 vacancies at one point – 4 or 5 are open right now. The police chief managed the retirement costs inside his budget.
State is likely to change the deadline for our pension funding from 2018 to 2040. Not much effect this year, but might be a big saver in a few years.
There was a discussion about my proposal to use fully loaded budgets. The Manager was “concerned about putting the actual money in the budgets.” He wants to make it so that it’s not in the budget, but they are on the hook for the additional costs. I think the manager made my point for me when he was talking about schools and special ed. I’m not sure what he’s afraid of – this should make his budgeting job easier in the long run. There were some concerns about a couple minor items like current v. past employee costs and the fact that some budgets are bigger than others. Maybe do it as grey bill system? What about the budget distortions for inconsistent department retirements? I think the concerns expressed are pretty easy to manage. There is a big picture, and the other details are much more minor. (Newton does it this way I was shown afterwards. And Windham NH. And I need to check Belmont).
Symmes update: The question is, how much is the bank willing to eat on the loan. The result might be a lighter density housing.
No update on Peirce Field costs.
He might seek authorization to sell unused schools from Town Meeting.
MSBA we are in the queue. They approved our project manager and architect for Thompson. We’re about to sign a feasibility study contract with architect. The architect will review pros and cons of renovation v. reconstruction.
We reviewed several warrant articles briefly, including vacation policy change, capital committee hearing March 15th, Minuteman 22nd or 24th. (Minuteman looking for capital feasibility. First pricetag is $98 million which is insane). Retirement board on the 10th – Mr. Bilafer. Uncle Sam, Water Bodies, Traffic Supervisors, Restoration of Trees were discussed. The Reorganization Committee has 2 articles. One article to request to allow for consolidation of school town functions. That would still require TM and SC to agree to changes. Compensation of Selectman to grandfather them with benefits and don’t give any future ones befits. On the reorg committee, one group is looking at personnel, payroll, accounting; IT; regionalizaiton; collective bargaining and legal.
Transfers from reserve fund. BoS requesting transfer $55,456 for the 2 elections . Special Town on $2000. $57,504. BoS approved by vote of 14-3, paid as the bills come in – some members wanted to wait for the bills to actually arrive. Clerk wants $2608. Approved.
Treasurer – reserve fund transfer approved.
The school budget’s numbers were discussed.
We talked about a plan for our departmental meetings on budgets and how to evaluate add-backs into the budget.
Next meeting is Wednesday, focused on the warrant.
One thought on “Two Arlington Finance Meetings”
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Dan, great post as always.
You are quite correct that our new CFO is much more conservative when making budget assumptions than we have seen in the past, and I have supported that approach. Many of the estimates around the possible elimination of selected revenue sources were made based on her own consultations with colleagues on the Massachusetts Association of School Business Officers. Clearly, a number of these assumptions turned out to be too conservative.
I still support the conservative approach, though. Last year, we budgeted against hope and a lot of the bets broke against us. The most devastating were the slashing in circuit breaker reimbursements by $500,000 from numbers we were given in June, unexpected new outplacement costs of about $400,000, and a drop-off in grant revenue by 12%.)
All this said, I have emphasized that we need to quickly update our estimates as new information becomes available from the State and concurrently communicate to parents how the potential impact on the schools has shrunk and what that means in real terms. Temper expectations, tamp down conflict…
At Thursday’s Budget Subcommittee meeting, we asked for a few things.
For one, we recognize that there has been a lot of confusion and angst as our target gap has shifted since the fall. We asked the CFO to pull together a side-by-side analysis showing what has changed and to include to the extent possible FY10 actuals.
We also recognize that as we discuss special education as a major cost driver, we need to break it out into its component parts, as there is a lot that falls under that bucket.
Out-of-district tuition increases and associated transportation costs are quite straightforward, as those are tracked very granularly and can easily be aggregated.
There are then special education staff costs (administrators, specialists, team leads, etc.), which are a little more difficult to compare year-to-year, but are still accessible. Contracted services, a little more difficult still.
And then there are start-up and operating costs for new programs. These are housed in a number of our schools. How do we account for investments to upgrade these spaces? How do we apportion the ongoing costs (energy, facilities maintenance, etc.), if at all? And, for in-district transportation, can we and should we apportion costs by function?
These are the kinds of questions we are asking, but which will take time to answer. Some of the inflation here is an extrapolation based on official DOE numbers over the past years, but — as we know — “past performance is no guarantee of future success…”
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Dan, FWIW, I support your approach to looking at the budget. I think it is more transparent and gives administrative units more accountability. It also makes it easier to present a picture of the total value of compensation, which is something my employer provides me with regularly.
I might propose that if we change the way we look at such things, that we start to include outside revenue sources — such as grants, school department fees, etc. — in the picture to make it whole.
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Great work. I’m all ears for other ideas for navigating these waters.
Joe