Author Archives: dunster

Campaign Nuts and Bolts

As I’m sure you remember, I’m running for Selectman.

There’s not a lot of definitive guidance I’ve found about running a legal campaign for municipal campaign.  I’ve slogged my way through a fair amount of it the last few weeks, so I figured I’d write it up here for future interested candidates.

  1. The first is easiest – walk down to the Town Clerk’s office and pull papers.
  2. Create a committee.  There are a few campaigns where you don’t need a committee, but it looks to me like you really should do this.  Appoint yourself chairman, find a treasurer, and fill out the forms.  The CPF M 101 form is found here. Fill it out and turn it in to the Town Clerk.
  3. Then you need to get a EIN (tax ID number) from the IRS.  This took me forever to figure out, but finally found the magic quote: “A political organization must have its own employer identification number (EIN), even if it does not have any employees.”  Read it here, then request your EIN.  What makes it easier, by the way, is when you click the interview option that you’re doing this only for bank purposes – it’s a short application then.
  4. Open a bank account.  My regular bank, Cambridge Savings, won’t do campaign accounts anymore, so I went to Central Bank on Broadway.  I brought my treasurer, too.  We signed things that said we were neither terrorists nor online gamblers (what a waste of time and money. . .).  We deposited checks.  And we were in business.
  5. Next up is filing statements by January 20.  That’s the year-end statement for 2010.  To do that you need CPF M 102.  Again, file that one with the Town Clerk.

Hope that helps someone.

I’m Running for Selectman

With excitement, energy, and a healthy appreciation of the challenges ahead, I am announcing my candidacy for the Board of Selectmen. I’m asking for your support in the upcoming campaign, and your vote on election day on April 2, 2011.

My campaign for Arlington:

  1. Arlington, like most communities in Massachusetts, is working through a very difficult financial time, and some difficult decisions are facing the town. My experience as a member of the Finance Committee and my knowledge of the town budget will help us make wise choices about preserving important services for our residents while protecting taxpayers.We stretched our 5-year plan to cover 6 years, and it is time to write a new plan for the next few years. Unfortunately, the town has thus far been unable to reach an agreement with its employees that controls health care costs. Until we find that agreement we cannot fully preserve our town services for a price we’re willing to pay. Over the next year we’re going to have to decide which services we can do without and which services we’re willing to raise taxes for.
  2. Town residents rightly demand good customer service from the town. They want access to services at hours that are convenient and a fast, accurate, and polite response to their request. I believe that we can harness technology to bring better customer service, 24 hours a day, to the town. The town’s online question-and-answer website has been a good start, but it is time to expand that service.
  3. Taxpayers expect smart management of their money. The key to smart management is smart measurement. You get what you measure; if you choose the right measuring stick, you’ll get more of what you’re looking for. I plan on working with the Town Manager, other town officials, and town employees to identify key metrics that we should use to measure ourselves.

I’ve been an active volunteer in Arlington government for more than ten years. I’m a current Town Meeting Member, and a past member of the Finance Committee, Information Technology, Power Municipalization, and other committees.

I’m optimistic about Arlington’s future, but energy and optimism are not enough. I bring new ideas, new experience, and a strong work ethic to this campaign.

As the campaign progresses, please visit this website. I will put up regular updates here.  I welcome all questions and comments at dan@dandunn.org.

Sincerely,

Dan Dunn

Special Town Meeting 2010

I take notes during Town Meeting. They are not official in any way. As I listen to people speak, I type notes. I’m sure that, at times, I mishear or misunderstand the speaker, but my notes represent what I hear at the time. I then publish the notes every night after the meeting. I do go back and make a few edits as errors are pointed out to me.

I do not try to reproduce my entire notes for this online version. Sometimes I relay a quote from a specific speaker. Most of the time I only summarize the discussion. At points I give a purely personal opinion; those are clearly labeled like this: Personal note.

8:04 the meeting was called to order.

Town Meeting Member Charlie Gallagher played the piano, leading the meeting in singing the National Anthem.

Moderator John Leone is looking for two more members of the Town Meeting procedure committee.

He swore in the two new Town Meeting members. They were greeted with a round of applause.

Moderator Leone noted that the School Committee was sitting at the front of the meeting at his invitation because of the content and importance of the special town meeting.  A jester suggested to me that they were seated that way so they could have a clear view of the rotten tomatoes that would be thrown at them.

Selectman Chair Diane Mahon moved the rules of the meeting, which were approved. (The rules basically say that only town meeting members and town officials and town employees can sit “on the floor” of town meeting. Meeting visitors should watch from the gallery above the floor.)

Town Clerk Rainville certified the meeting is legally called.

Mahon moves that the meeting comes back Wednesday if we don’t come back.

Mahon read a proclamation on Stratton’s recent selection as a Blue-Ribbon School.

Article 1 – Reports

Finance, Selectmen, Capital Planning, and School Committees all submitted reports.  FinCom Chair Tosti moves that the reports’ motions be made the main motions.  (This has the effect of giving most articles a main motion and speeds the process by making all the motions at once, and in writing.)  The article was tabled.

Article 2 – Budgets

FinCom Chair Allan Tosti explained that we’re in deficit for FY10, and this budget motion fixes that. He explained the creation of the additional reserves, partly from cutting the school budget further, and partly from dipping further into the town’s reserves, specifically the tip fee stabilization fund.   He said we didn’t want to go into the tip fee, and will try to return it. The reserve fund is for all town budgets, not just schools, not just town manager. This is a moderate position, he said.

School Committee Chair Curro spoke. He talked about how we’d gotten into this mess, the changes the town is making to prevent it in the future, and talked about the FY11 budget.  I really liked his speech. He clearly acknowledged the failures of the school department leadership in budgeting and communication. That clarity has been lacking in many other discussions by the school department. That acknowledgement goes a long way in my mind. It gives me reason to believe that they are going to make progress in implementing the changes that are necessary for a high-performing, well-managed school department.

Treasurer Stephen Gilligan made a substitute motion. He wants to cut the school budget, but he does not want to dip into the reserves. His first argument was that the Finance Committee had previously objected to spending reserves. He’s correct, we did say that, but time has passed and facts have changed since then. Secondly, he suggested that FinCom expects FY11 to be a repeat of FY10, and that $200,000 is not sufficient for the task anyway. Mr. Gilligan was incorrect – we never suggested that FY11 will be a repeat of FY10; we simply said that FY11 is very tight.  Last year there were three $400,000 swings in special ed budgeting, two in the wrong direction, one in the good direction.  We increased the reserves to handle that type of repeat – of course there is no guarantee that it is enough. He made two further arguments, one that there is no rush to do this, because we could do it at a special town meeting in April. He also said that bond rating agencies will look on this as a failure to manage our reserves well. I think both of these arguments are reasonable ones. They didn’t persuade me, though.

Gordon Jamieson suggested that the finance committee’s path is down the middle of the issue and he supported it.

School Committee member Joe Curran spoke. He said that the School Committee was not following its own words.  I paraphrase: “If the school committee followed its words, we wouldn’t be here, and we wouldn’t be in a lawsuit.” He noted that no one has been reprimanded. He mentioned a number of negative issues the school committee has been a part of.

Joe Tully spoke in support of Treasurer Gilligan’s motion. He reviewed the school department mistakes, as outlined in the auditors’ reports description of the errors. Tully wanted to know who knew what and when.

Paul Schlictman gave a long lecture about budget cuts and state spending. He blames the problems in the FY10 budget on failure to properly fund the schools on a town and state level.

Bill Hayner, former teacher spoke. He deplored the ongoing litigation. He said that if this was a business, the CEO would be fired, and so would the board. He called on the entire school committee to resign and stand for re-election.

John Deyst, Finance Committee member, pointed to a specific part of the fincom report detailing FinCom’s feelings. He said that the school department needs to be a participant in the management of annual reserve funds, unlike past years. He wants to preserve the good educational successes of our school systems.

Josh Lobel asked a question about why not put this into a special education reserve fund. Al Tosti replied that the school committee already refused that option, and that it made sense to pool reserve funds. Lobel made the point that the school department is not wasting money. It was noted later in a private conversation that this was the only question of the night – everything else was a speech.  Very unusual.

Dean Carmen moved to terminate debate. 143-40 it was terminated (not sure I heard that number right).

Gilligan’s motion went down 86-100.

FinComm recommendation vote passed 2/3 by voice vote.

9:25 called a 10 minute break, returned at 9:39

Article 3 – Thompson Land Swap

Joe Curro proposed a resolution as a substitute motion. Board of Selectmen and School Committee and Finance Committee all endorse the resolution. It doesn’t refer to the land swap, nor the cost of the project. Joe Curro says that this is the strongest supportive action Town Meeting can make. Chris Loreti is concerned that the plan is too expensive. He’s voting no because he doesn’t think any of the discussed options are viable. Clarissa Rowe said that the support is more important at this time – no one will be supporting these prices, but this support is the right step to move the process forward. Ruderman terminates debate. Motion passes. There’s no chance that a building of $350/sq ft will be recommended under this resolution.  That would never get past the Board of Selectmen, let alone FinCom.  The challenge here is that there is no guaranteed path to a school renovation/rebuild – there are lots of parties involved, and they move toward agreement and each other in baby steps.  This resolution was a baby step that takes us closer to an eventual solution and millions in state assistance.

Article 2 again –

The moderator said that article 2 was a 2/3 vote, and as such needed a count since it wasn’t unanimous. I think he’s incorrect – I don’t think he needs a count, he can rule on a 2/3 voice vote if he chose to. 155-3.

Article 4 – Stratton

Capital Planning Chair Charlie Foskett explains that we’re spending roughly the same amount as originally planned, and when we originally planned. However some of the items have very long lead times. This vote enables us to order things earlier without actually spending the money earlier. No discussion. Passed 161-0.

Article 5 – GIC

Al Tosti reported that the Finance Committee supports a vote of no action. No action. This was a topic of much debate at the Finance Committee meeting tonight.  Several members wanted to keep this item open until next Monday, until after the various unions hold their votes.  There’s a couple of reasons for that – one is that the committee wanted to follow through on statements made this past April.  The other is fear that a union might repeat last year’s disaster and kill the deal.  In the end, the majority of FinCom decided to avoid inflaming the situation and let the article die.  Should a union kill the deal, it’s too late to salvage the issue this year anyway, and we’d take the issue up again in April.

Article 6 – Reserves

Voted no action.

The meeting was dissolved at 10:05.

I was pleasantly surprised that we got this all done in one night.  I had predicted two nights, and I’m delighted to be wrong.

I’m also pretty happy with how the debate on the school budget went.  I was on the list to speak.  If it got to me, I was going to remind people that there were only two options – the FinCom recommendation and the Treasurer recommendation.  The third option, to do nothing, was not an option at all. As it was, I think the discussion was terminated at an appropriate point.

In general, the debate was not about those two options.  It was a discussion about the school department, the school committee, choices made, and external conditions imposed.  I think that discussion was somewhat cathartic for the meeting.  A lot of people had a lot of things to get off their chests, and they did.  I think just about everyone had their thoughts aired by one speaker or another.  I hope this represents a turning point and we see the school department and committee earn our trust back in the coming months and years.

On Being Right or Wrong

There’s no doubt that Twitter and Facebook have cut down on my blog output.  I feel like my friends and acquaintances are well aware of what I’m thinking and doing, and the urge to blog is easily overwhelmed by the day-to-day priorities.  I tend to blog only when my thoughts are too long to do justice in Twitter.  Today, the thought is 29 characters too long:

“One of life’s little ironies is that, over the long run, people who are willing to admit they could be wrong turn out to be wrong a lot less often than people who aren’t.”

That’s Nate Silver, demonstrating again that he’s got the best blog on the internet.

Finance Committee Nov 3, 2010

Black text is mostly objective, red text is mostly subjective in nature.

Chairman Allan Tosti opened the meeting and ran through the agenda.

Article 5 – GIC Special Legislation – Deputy Town Manager Adam Chapdelaine explained that significant progress had been made on the GIC negotiations with the unions. He thinks the GIC legislation envisioned in the warrant article would have a negative effect at this point on progress, so he’s looking for a recommendation of no action. If the ongoing negotiations were to get stuck, there is still time to modify the recommendations. On questions, he noted that if the savings are larger than anticipated, the employees and town split the benefit. If the savings are smaller, the town swallows the cost. Moved for no report at this time, and passed unanimously. There’s a bit of subtlety here that FinCom voted no report at this time rather than no action.  If anyone is paying close attention, what we’re saying is that we have an eagle eye on the current negotiations, and we want to keep our options open in case there is a last-minute collapse in negotiations like there was last year.

Article 4 – Stratton Project Adjustments. Since the last town meeting there have been some changes both up and down in cost that largely wash out.  If there was no special town meeting, we’d be asked to approve Phase 2 in April.  Instead, they want to advance the authorization to buy some capital items with long lead times from the summer to the winter, enabling them to get the project going sooner. The actual bonding of the money will still be next year, so the cost is the same; it’s just earlier authorization to get the long leadtime items rolling.  After discussion, approved unanimously.

Article 2 – Revising Budgets Tosti presented a draft motion that accepted the school department’s proposed reduction in budget, thereby resolving the FY10 deficit.  It was discussed that the proposed school committee budget depends upon a 65% increase in non-taxpayer revenue (fees and offsets), $2.8 v $4.6 million; those areas are the same areas that failed to meet budget last year.  It was noted that the proposed budget was actually $777,000 larger than last year.  (See pages 16 an 17 of this PDF from the CFO) It was also noted that there was no built-in reserve for either a failure to meet revenue targets or for managing the volatile special education budget.  Overall, the budget appears to be very aggressive and very fragile – there is no place to adjust if revenue or expenditures miss their targets, and we know from last year that both are hard to predict. Steve DeCourcey moved to reduce the school budget by an aditional $377,000, add that sum to the reserve fund, and strongly suggest the school department create the $400,000 reserve the CFO and Superintendant requested last year.  The motion would have the effect of passing a budget that is the same size the original FY11 budget, plus a $400,000 reserve.  There was an extended discussion about special education and the Bridge the Gap funds.  Paul Bayer moved to reduce the school budget by $177,000 (that is, a budget $177k less than the school committee request, but a budget larger than DeCourcey’s cut of $400k), and put the $177,000 in the reserve fund, and appropriate $200,000 from tip fee stabilization fund to the reserve fund. There was an discussion about the three proposals. At first, I wasn’t in favor of additional cuts to the school budget, but I was partially won over by the discussion.  First of all, it’s clear that the school department has been bad at budgeting and even worse at managing the budget as it proceeds; there is little faith that the newly proposed budget is better than past ones. Second, it seems likely to me that there will be another special education cost shock this year; we’ve seen so many that there is no reason to think this year will be different.  We need to be ready for it.  Third, I agreed that the Finance Committee needed to take leadership in school budgeting to prevent future overruns.  We need a reserve, somewhere, to handle that.  The reserve fund is, was, and will be available to the school department, but we need to increase it in size to be better prepared for special education cost fluctuations. DeCourcey’s motion failed 3-12. Bayer’s motion was approved 12-5. It was noted, half in jest, that this proposal will be unpleasant for both the Superintendent (lower budget) and the Town Manager (use of one-time reserve money).

We discussed the FinCom report to Town meeting  We discussed the Power and Sullivan auditor report. We discussed the school department’s failure to disclose the deficit. We approved a general draft of the recommendations.

Article 3 – Thompson School Land Swap – We discussed the proposal to swap the land at Thompson.  There was discussion of the drastically increased risk of the option.  The unlikeliness of success was discussed.  The increased cost ($2m) was discussed.  In general, the committee would prefer a different third option. Unanimous recommendation of no action.

Article 6 – No action. We think Article 2’s recommendation covers this.

We voted to transfer of $50,349 from the reserve fund to cover the unwelcome increase in payment to the retirement fund, caused by slow action of the state legislature.

Approved minutes of 9/22 and 11/1.

Adjourned.

Why I’m Voting for Deval Patrick

I didn’t vote for Deval Patrick four years ago.  I kinda liked the guy, but I expected four more years of standard Beacon Hill special interest protection, waste, and corruption.  I have been delighted and surprised by the kind of governor that he’s turned out to be.

  • Do you own a car?  Have you noticed that your insurance rates are competitive? Have you noticed how they went down?  Thank Deval Patrick.  He did something that his predecessors, Democratic and Republican, did not.  He opened the insurance market.
  • Did you hear about the pension reform?  About how the qualification for pensions are much more strict, and no more sweetheart deals for part-time political hacks?  Deval Patrick.
  • For a long time there were 49 states that permitted the option of flagmen at construction sites rather than the more expensive full-time police officers.  Now there are 50.  Guess who, again.
  • He was a fierce supporter of gay marriage, and his influence is one of the reasons that the Constitutional Convention declined to put the question of gay marriage on the ballot.  He helped deliver the 75% of the legislature that kept gay marriage legal in Massachusetts.

I’ve lived in Massachusetts for almost 20 years now, and he has far exceeded his predecessors.  I want him to continue his work.

There are plenty of other reasons why you should vote for him, too.  Check out his list of accomplishments.  I’m sure you’ll find more reasons why he’s the right choice.

Please vote for Deval Patrick!

Finance Committee November 1, 2010

Black text is mostly objective, red text is mostly subjective in nature. I’m in a hurry tonight, and these notes are more “raw” than usual.  Please ask questions in the comments, and I’ll go into more details.

Note that we did not finish our business tonight, and we will meet again on Wednesday at 7:30 in the 2nd floor of Town Hall.  We had a 2.5 hour hearing tonight and didn’t vote on a single article.  I think this points to a 2-night Special Town Meeting.  If FinComm needs 2 nights, Town Meeting probably will too.

Chairman Allan Tosti gave an agenda review.

Article 2 – Budgets – School Committee Chairman Joe Curro opened.  The MASBO report on the illegal expenditure over budget just came this weekend; the School Committee has not reviewed it yet.  The budget subcommittee, Leba Heigham, Kirsi Allison-Ampe, and Jeff Theilman, is reviewing it.  The report was given to FinCom.

Superintendant Bodie reported that School Committee has approved the revised FY11 budget. She spoke about avoiding the problem in the future. One important part is to have better tracking of where we are.

CFO Diane Johnson was next. FY10 was both over expenses and under revenue. Tracking system was insufficient – worked in good days but not in bad. She reviewed the new way of looking at the budget. The first way is by cost center. There were two other ways, but printed copies of the other two views were not available.   The budget summary number was also not available in printed form. (budget detail, revenue detail for FY10 and FY11, the presentation given at School Committee)

There was a questions about FY10 actuals. Johnson says that she can’t reconcile FY10 actuals v FY11 budget because of the change in the chart of accounts. There was a question about the FY10 overages and how it is displayed.  I asked about the presentation to Town Meeting.  The presentation has been discussed, but not written.  I’m disappointed, again, by the presentation from the School Department.  The handouts provided were incomplete and confusing. The amount of money being requested was not in writing.  We are two weeks away from Town Meeting, and there is not yet a draft of the presentation to be seen.  The level of preparation was insufficient.  In a situation like this, you’d expect the opposite – over preparation, and certainty that every t was crossed and every i was dotted.  I’m concerned that Town Meeting will be lost in a sea of confusion, and it will take us days to get to a resolution.

There was another, stronger request to see FY10 broken out by category. Again, the school department said that it couldn’t provide it.  Paraphrasing Steve DeCourcey: “You said in the 2010 presentation that you would spend $45 million. You’ve provided a report that details $38 million in expenses from the general fund. There’s another $7 million in grants, fees etc.  How come you can’t show how you spent the other $7 million?”  Steve makes an excellent point.  I’ve talked it over with a few finance professionals, and they all answer the same thing.  “Changing the chart of accounts is hard, but there’s always a way to generate that report.  Even if you have to stay up late with Excel.”  It is incredibly frustrating that 4 months after the fiscal year closed, we still can’t generate good reporting.

Tosti pointed out some of the numbers that may be accurate, but because of the way they are phrased, don’t seem to match. For instance, the School Committee voted a budget, and Town Meeting voted a 2nd budget that was different. The Town Meeting number is the one that matters, it’s the appropriation – so use that one, not the School Committee number.

Johnson reviewed the confidence level in each line of the fees, revenues, and offsets.

When asked how conservative the budget was. Johnson reported that revenue was conservative, but has come in better than expected over the summer. She said the reserves for this year were insufficient. If another few special ed kids move in, we’d notice it and make a change. That might involve cuts.

There was significant discussion about the Powers and Sullivan audit report, and that the School Committee needs to include the recommendations in its deliberation.

Gordon Jamieson via phone to discuss Article 6. He thinks we should have a reserve fund on the order of $1-$1.25 million.  He did not offer a basis for the number.  He thinks we should use the current reserves and appropriate them into a school-wide reserve fund. Despite repeated prodding, he didn’t have a specific suggestion. There was discussion about whether the School Department could make requests against the annual reserve fund. The general opinion was that it could. I’m still confused by what Gordon was trying to accomplish.  There was no proposal, just that we should “assess risks between now and the 15th.”  In the absence of a proposal, there’s not much for us to vote on.

Article 3 – Thompson Land Swap – Jeff Theilman went through the Thompson rebuild presentation. He reviewed the MSBA process. The School Committee is seeking to keep a land swap at Thompson as an option. There were rough estimates of cost of the three options: $32M on option 1 – addition w/renovation (total back $14.9M). $32.9 option 2 – tear down and rebuild, same place (total back of $15M). $33.9M on option 3 – build on the fields, then tear down and rebuild a park, (with $15.3 back). On and 1 and 2, tack on $500k+ for relocation of students.

There were sharp questions about whether this really is a viable option – it’s expensive and more risky. There were questions about drainage.  I asked what happens if Town Meeting votes no.  The answer isn’t clear.  After further questions, they probably go to the MSBA with a weakened third choice.

I asked for the actual language of the vote – it was not yet available.  We need it in order to vote on Wednesday.

On Wednesday we’ll discuss Articles 4 and 5.

Finance Committee 9/22/10

Black text is mostly objective, red text is mostly subjective in nature.

Every year at this time FinComm holds an organizational meeting.  They’re generally short and light on content.  This year was much more full as the first topic was the school budget overrun.  I arrived about 5 minutes late, and it had already started.  I noted that 4 school committee members were present, a few people I recognized, a few I didn’t, and even two people who appeared to be reporters.  Reporters at a FinComm meeting!  Wow!

Superintendent Dr. Kathie Bodie was talking, already started as I arrived.  She ran through some of the revenue target and expenditure misses that we were all mostly up to date on, including special ed.  She talked about the difficulties of knowing “where you are” in the budget because of journal entries out of grant funds into the general fund.  They started doing those in late May to understand where the budget was.

She talked about the position control and better accounting methods that are going into place.

She noted that some teachers get paid over just the school year, and some get paid the whole year, by their choice.  To pay that July and August salary, you roll money over from the ending fiscal year to the new year.  That rolled over money is rolled over and co-mingled with the new year (FY11 in this case) and summer school money.  She said that they “knew we were going to be short rolling over.”

They thought that with with belt tightening and projections improvements in FY11, that they could pay for that overage with fy11 money.  The auditor said they can’t do that mechanism, and  that leads to the need to the need for the special town meeting.  “We tried to solve the problem, the mechanism wasn’t acceptable, and so we need the special town meeting.”

School Committee Chair Curro spoke next and said “It was a big surprise to us as well as you.”  He said we worked on fy11, took eye off fy10.  He listed things being done including: process audit, organizational issues, system issues, self-reflection.  Recommendations by October 29

Finance Committee members then started asking questions.

The first question was about the system, and why it had worked in the past and broke this year.

I asked a series of pointy questions about when the problem was discovered. I wanted to know when it was clear there was a deficit, i.e. when they knew that they were using FY11 money to cover FY10.  That was never discussed during our budget meetings, so the timing is important.  Dr. Bodie said she knew that there was going to be “short rolling over” on June 11. But, that fact didn’t become public until August 26th.  I expressed frustration.  This is the part of the story that just can’t be explained away.  There is just no reasonable explanation for why this information took so long to be shared.  There are other parts of this problem, too, but few are as clear-cut.  On June 11th, she should have started a fire drill.  What she actually did was tell Al Tosti that things would be OK.

There was a question/discussion about how we actually know in September how many 12 months teachers there are, but we don’t encumber the money until June.  That has changed.  Discussion of how the practice is to roll over the balance at the end of the year- regardless if it is too much, or in this case too small. Too much is a “good” thing – gives you extra money for the coming year. That extra money is then your buffer.

There were a couple questions about if this Jobs Grant money could be legally used this way.

There were several points about how the FY11 budget is very tight. If we have another $400,000 special ed problem, we don’t have a way to cover it.   If there are shortages, we need to know.

There were discussions about special ed.

We talked about the need for better communications.

There were several questions about the FY10 budget.  There is no meaningful accounting yet of FY10 budget v. actual. Ruth Lewis is working on it. CFO is working on state numbers which is another slice on it. The CFO noted that the last fy10 budget v actual was in October, but discontinued because it did only 80% of the budget.  She went on to say  “and that was remiss. I should have put something in place and I didn’t.”  That was the first apology I’ve heard her say.  It’s a big step, to me.  Up until then, the dialog had all about what was hard and external factors that made it someone else’s fault.

There was a question about the school department’s FAQ that it released saying that the schools needed to “reduce their reliance on funding beyond the Town appropriation.”  We encouraged the school to get more grants, not less.  That FAQ was a head scratcher, for sure, but there were so many other things going wrong that I didn’t focus on it.  The FAQ essentially says, “stop doing grants, and get more money from taxpayers.”  It’s not a well-thought notion.

There were several more questions, but I’ve paraphrased them or linked them to ones above.  My bottom line is this: they knew they were in trouble in the fall of ’09, but didn’t have the wherewithal to track the problem and mitigate the problem.  Then, when the problem finally became more defined, they didn’t share the information in anything close to a timely fashion.  It’s an extremely disappointing performance from the leaders of our school department.

At that point the school people left (except Kathie Bodie, who stuck around) and most of the audience left, and the reporters left.  Which is kinda funny, because they walked out just before we talked about the pending $48 million deficit in the next 5 years, which really is much much worse.

Town Manager reviewed the pending 5-year outlook.  I took notes, but I’m too tired to copy them here.  See the FinComm booth on Saturday at Town Day, and we’ll give you a copy of the outlook.  I’m working the booth from 1:30 to 3.

We set the next meeting for November 1 and 3 in advance of the Special Town Meeting.

We re-elected chair Al Tosti,  vice-chairs Foskett, Fanning, and Jones, and secretary Peter Howard.

We have vacancies: pct 6, 11, 17.

We prepared for Town Day.

We talked briefly about Minuteman’s regional agreement.

We adjourned.

The Deficit in the Arlington School Budget

Ten days ago, the Arlington School Department issued a press release saying that the 2010 fiscal year, which had closed on June 30, was $1.5 million in deficit.  This deficit is illegal by state law, and the town has to resolve that.  Otherwise the town can’t do things like set the tax rate or send out tax bills.

I was absolutely shocked by this press release, and so was virtually everyone else.  The Finance Committee had no idea there was a deficit.  The Board of Selectmen didn’t know.  Even the School Committee was surprised.

The School Committee had a meeting that night (8/26), and I attended so that I could learn more.  There was a general presentation by Superintendent Kathy Body and CFO Diane Johnson about the revenue shortfalls of FY10 and how to handle it, but there was essentially zero discussion about how there could be a hole this big, identified this late, and surprise so many people.

Since that meeting I’ve been calling and emailing people, trying to put the story together.  I think I’ve largely succeeded.

I think there are at least four big-picture questions worth discussing.  If you think I’m missing one, please let me know.

  1. What the heck happened?
  2. What errors were made?
  3. How can we avoid this in the future?
  4. How do we get out of this mess?

1. What the heck happened?

Here’s an abridged timeline, factually accurate, but omitting some details in the interest of clarity.  Skip down to the Late June section if you’re bored already.

  • Fall and Winter ’09 – The school department learned of a number of things that negatively affected the budget.  They’re loosely outlined in the presentation given on 8/26.  We could explore the nitty-gritty of these for ages, but this discussion is best served by skipping that detail.
  • April/May ’10 – The School Committee, Finance Committee, and Town Meeting debated and ultimately voted a school budget for FY11.  Each of those debates included some discussion of the FY10 budget performance and the large gap that had opened between expected revenues and expected expenses and how to manage that.  At none of those debates was it suggested that the FY10 budget would be in deficit.  During this period (on 4/30), the School CFO Diane Johnson requested a reserve fund transfer from the Finance Committee of $250,000.  FinComm Chair Al Tosti said that kind of money wasn’t available, but the committee would consider the request.
  • Early June ’10 – This is where the paper trail gets thin.  What is clear is that on June 11 the school department withdrew their request for the reserve fund transfer.  What is also clear is that FinComm chair Al Tosti believed that to mean that the deficit had been managed through cost controls, grants, and transfers.  Clearly other town financial officials, paid and volunteer, shared that understanding; they never would have permitted an illegal deficit to occur.
  • Late June ’10 – Some anticipated revenues did not appear before the budget deadline.  Apparently the Superintendent and CFO both knew that there was a deficit coming, and they thought they had a plan.  Every year, a large number of teachers elect to be paid their salaries over 12 months (rather than the 9.5 months of the school year).  Every year, some money is rolled forward from the previous fiscal year to the new fiscal year to cover those salaries, i.e. the teachers’ salaries for July and August ’10 are paid from FY10 money that is rolled forward to FY11.  What the Superintendant and the CFO planned was to roll forward as much money as they could (approximately $1.5 million) from FY10, and then pay the rest of July and August salaries (approximately another $1.5 million) from FY11 money.
  • August ’10 – the town’s independent auditor noticed that only $1.5 million was rolled forward and started asking questions.  It was determined that it was not possible to pay those FY10 obligations with FY11 budget.  Thus, the FY10 budget was in deficit.

2. What errors were made?

There’s a bunch.

  • In an ideal world, the CFO and Superintendent should have know that their plan was not viable.  They should have known that they can’t pay FY10 bills with FY11 money.
  • The CFO and Superintendent should have shared their plan with a wider set of town leaders, who would have identified that the plan was not viable.  This is the error that drives me crazy.  The Superintendent and CFO had been to the Finance Committee twice in March and April, and it was clear that we all needed more communication.  FinComm hadn’t heard about all of the budget problems that had accumulated in the previous 8 months.  I even took the Superintendent aside and said as much at Town Meeting, asking her for more updates to FinComm in the coming year.  She and the CFO should have been banging the drum in June about the bad news as it came in. If the communication had been better, this could have been avoided.
  • The School Committee should have been more aggressive in its supervision of the FY10 budget.  They had asked for more frequent reporting, and were told that it was difficult/impossible because of charts of accounts, accounting practices, and other technical challenges.  They shouldn’t have taken no for an answer.
  • I’m curious why the Comptroller didn’t notice this earlier.  The $1.5 million roll-forward was much smaller than in the past, and it seems like that should have raised a flag.
  • In retrospect, I wish I had asked harder questions about the FY10 school budget.  By April we all knew there was a problem.  In June, when I heard the problem was resolved, I should have asked harder questions about how it was resolved.

3. How can we avoid this in the future?

Most of these are pretty obvious once the errors are spelled out.

  • When you know there is a problem, say something. Keep saying it until there’s a consensus and a plan.
  • Improve budget reporting so that everyone – Super, CFO, School Committee, FinComm, Comptroller, Town Manager, everyone knows how the school budget is doing.
  • The School Committee needs to learn to ask the hard questions, and keep asking them until they get the answers they need.
  • Change our accounting procedures.  Encumber the summer salary money earlier in the year, not at the end.

4. How do we get out of this mess?

There are a number of technical things that need to be done, but I don’t know what they are yet. Clearly we need a Special Town Meeting, and we need to appropriate some money to make FY10 no longer be in deficit.  There are a lot more details to be worked out.

Besides the actual financial mess, there’s a mess in terms of public trust.  Anyone who reads a headline about a surprise $1.5 million deficit is going to have serious questions about the competency of the town’s management.

It is easy to talk about the various factors that caused the budget to be out of balance.  They are largely external and out of the control of the school department.  The management of the financial problem, how we react to these challenges,  are things that are entirely within the control of the school department. This is the part that was screwed up.

My advice to the School Committee and the Superintendent and CFO is that they need to be transparent about the problem management.  They need to write a narrative (not unlike the one I have), they need to talk about what went wrong, and they need to talk about how they’re going to avoid it in the future.  No one can do this for them.  They need to do it themselves.

That is the first step towards rebuilding the trust that is required.  We need to believe that we have the skills to manage the problem.  Then, and only then, can we have a Special Town Meeting and unwind the financial problem.