Category Archives: Finance Committee

Finance Committee – ’09 Budget Review Kickoff

The ’09 budget year started in earnest for the Finance Committee on 1/28. Why are these notes three weeks late? I’m either lazy, or busy, or both! Non-Arlington readers will need to remind themselves where the delete button is. I have high hopes that I’ll keep up non-Arlington content, so I hope you don’t unsubscribe. As usual, F

We started by welcoming our new Executive Secretary, Gloria Turkall and our new member, Erin Phelps. You might know Gloria from the Town Manager’s office. Most of the committee knows Erin from her previous stint on Fincomm, but she’s new to me!

Al Tosti made a few comments about the proposed budget. It uses the Governor’s numbers, which means it includes the casino money. The Governor’s inclusion of the gambling money in his budget is a serious power-play. The General Court has to approve casinos, come up with other funding sources, or explain to the towns why their budgets have to be cut. I don’t know how it will all play out. I think this is a pivotal moment for the governor. Can he flex his muscles and get what he wants? Will he lose the battle, but win the public relations war? Or will the General Court carry the day? I can’t call it from here. The budget includes bigger increases for the school side – the town manager gave more room for the schools to grow. This was a new development.

We then reviewed the Town Warrant to consider which articles we thought we should have a hearing on. (You can read the current warrant version on the town website). We will hear discussion on the obvious articles, like budgets. We also agreed to hear about holding the warrant open until 60 days before town meeting; plowing the sidewalks; abutter notification requirements; special legislation for funding pond maitenance; Transportation Advisory Committee request; OPEB (other post retirement benefit obligation, specifically health care for retirees), POBs (pension obligation bonds), and retirement funding; and revaluation. The rest of the warrant was determined to be not finance-related.

The Minuteman High budget was discussed.

The Capitol Committee’s review was set for 3/3. The school budget schedule was discussed. A Symmes update was heard.

The committee’s “vacation” will be 4/2-4/9.

Minuteman High’s FY09 Budget Hearing

So far, Arlington’s five-year plan has been executed fairly closely. Health care costs have, on average, exceed the 7% ceiling, but the plan anticipated this by restricting the growth of salaries and expenses. The state aid hasn’t exactly lived up to expectations. But the biggest deviation from the plan has been the Minuteman Regional High. There have been several double-digit percentage increases, and I’ve been increasingly vocal about them at Finance Committee and Town Meeting. I decided to attend Minuteman’s public hearing on their budget and, if appropriate, tell them what I think.

The event was on Tuesday (1/22) at Minuteman. A written packet was provided. The Minuteman School Committee discussed the budget for a few minutes, then opened up the public hearing. The superintendent gave a presentation, and then the chairman solicited questions and comments.

I quickly flipped to the back of the book to check out the assessments. The good news is that Arlington’s preliminary assessment went up only $23,533, or 0.7%. The overall budget was up 4.0%, but the assessment formula and enrollment figures held Arlington’s increase to a lower number.

Finance Committee Chairman Al Tosti was present. He delivered a simple message: Arlington cannot sustain the budget increases that have been coming from Minuteman. (It would appear that the upcoming year will be a relief from that pace, but that information wasn’t clear at the time). He explained the budget restrictions imposed by the five-year plan, and how Minuteman was stressing that plan.

Several parents spoke about specific programs or personnel issues that they cared about. They would refer to specific lineitems in the expenses budget and ask why they were cut – often questioning items as small as $400.

I thought the budget package wasn’t very clear. I spoke at the hearing and asked for more information on the budget. The problem: The budget is roughly $17 million dollars. 21 pages of the budget document were devoted to a line-by-line description of expenses, roughly $6.5 million. But the lion’s share of the budget, the $10.5 million in salaries, gets only 5 lines in the whole packet! There is no way to see how many people are hired and fired, what departments they are in, what services they provide, etc. This budget presentation is, I think, what drove the questions from the parents. If they could see the bigger picture, they’d be able to ask more constructive questions and not waste time quibbling about $400.

I also repeated Al Tosti’s point about the rate of increases going forward. I think the message was understood by most (not all) of the committee. The superintendent clearly understood what we were saying.

One of the most interesting comments came from the superintendent. He noted that only 50% of the students who are accepted at Minuteman actually attend. He talked about the steps they were taking to increase that number. This sounds like a great idea to me, an idea that could significantly improve the enrollment numbers.

I look forward to more progress at Minuteman.

Finance Committee – Senate Election Reserve Transfers

Finance Committee met tonight to review several reserve fund transfers.

The committee has vacancies in precincts 6, 16, and 17. There is one applicant, and a couple possible 1-year fill-ins. Deadline is December 1 for applicants. Also, the Exec Secretary job has been posted. Anyone want a part-time job?

There was a short discussion about the projected deficit in the state budget. It’s too early to worry and we have some flexibility.

The next meeting of the committee will be in January to start the budget cycle. Any other transfers will wait until then.

The selectmen’s request for $75,000 and the clerk’s request for $4000 to pay for the special state senate elections were approved unanimously. It was noted that more elections were likely to fill the 23rd Middlesex seat.

The treasurer requested $25,000 to pay for a couple of retirements. This wasn’t a big surprise; we’d denied the money in the regular budget pending the actual retirement. The committee voted to transfer $20,000 and push the treasurer to find the rest. The vote was 11-0-1; I voted in favor.

The Town Manager made a transfer request to pay for unexpected remediation at Buzzell Field. The original request was for $70,000. The capital committee convinced the manager to pay for most of it with funds remaining from the Reservoir renovation. $20,000 transfer was approved unanimously.

Al Tosti talked about the fire station location study. Summer St and Washington is evidently the ideal place. They are seeking an OK from the Parks and Recreation committee.

Park St fire station is still not occupied. There was not a clear update as to why there was a delay. The indication was that there were problems with one of the doors, and a sprinkler system problem.

Finance Committee Organizational Meeting

Attention non-Arlington readers: Please do not panic! No more FinComm posts until January. I have a few blog posts perking in the back of my head, ranging from the Senate race to the Superintendent to presidential date qualifications. Riveting stuff, I tell you. Oh, and Red Sox angst. Lots of Red Sox angst.

Tonight was the organizational meeting of the Finance Committee.

First up was the Manager (and Deputy Manager) who ran through the latest revision of the 5-year plan. The latest revision had more good news than bad. Some of the good news included more unencumbered funds (free cash) in unspent budget returns from last year than anticipated, and more new building than anticipated. Bad news included a lowering of projected state aid going forward. In the past, FY09 was projected to require use of the override stabilization fund – to spend down the cushion we’ve been creating since FY06. The current projection is that we can continue to save money in FY09, and maybe even make the 5-year plan into a 6-year plan. The 6th year, FY11, is currently projected to have a $1.7M deficit. The deficit grows to $6.2M in FY12 and $7.9M in FY13.

I take this positive budget projection with a grain of salt. Last year we started the budget process thinking we had a big surplus. Then we learned of Minuteman’s increase and lower state aid, and the surplus shrank to $100,000. I have a theory that the same sort of cycle will appear this year. The good news comes in early, and the bad news rolls in later.

The manager gave a non-report of sorts on Pierce field – there have been no developments in the negotiations between the industrial parties on the costs of capping Pierce field.

The manager reported no progress on regionalization, fire or otherwise.

Charlie Foskett reported that the Symmes property was sold, to applause from the board. He ran through the final terms of the deal. I don’t have exact notes, but the town received $6+ million in cash. If the medical property is developed, the town receives $1.5 million more. If the property is not developed, the town receives that portion of the property back, and $500,000. There was an additional payment to the town of $600,000 for some sort of compensation of anticipated lower property taxes in the early years of the project. That leaves the town owing approximately $6 million that needs to be bonded.

The bad news is that because of the current residential housing market, the property will be initially developed as a rental property. That means a much lower property tax stream to the town. The current calculation is that if the bonds are structured properly, this revenue stream is enough to pay down the $6 million without impacting the tax rate. This will take much longer than had been previously hoped. The lawsuit by the abutters cost the town millions – millions in interest, hundreds of thousands in permitting, and millions more in property tax that could have been reaped off a larger settlement.

In the long term, the town will get a 1.25% on each of the apartments as they are sold as condos in the long run, and 1.25% on each condo sale thereafter. Also, once the developer clears a 20% profit, the town gets 90% of the profits thereafter, up to $10 million.

Next up was the new Superintendent at Minuteman, Dr. Ed Bouquillon.  He politely asked what committee thought, and he got an earful.  People asked for more controlled increases in assessments.  There were several suggestions about areas he could consider including cutting the number of programs and carefully evaluating how much was being charged for non-core programs.  He talked about the work he was doing to increase in-district enrollment and revise certain business processes.  He said several things that I found encouraging.  He was up front about needing to cut costs, focus the school’s mission, and be more transparent in budgeting.  I hope that he comes through.

Al Tosti was re-elected chair, and the vice-chairs and secretary were similarly re-elected.  It was announced that Walter Fey and Dan O’Neill were resigning from the board.  We’re recruiting new members from precincts 6, 16, and 17.

The next meeting will be in January, unless a need arises in the interim.

Finance Committee Approves Reserve Fund Transfers

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

Finance Committee met tonight to review several transfers out of the reserve fund. Every year Town Meeting appropriates a few hundred thousand dollars into a reserve fund. The finance committee approves transfers out of the fund into regular budgets as requested by various departments. Some transfers were made earlier in the year, but most transfers happen at the end of the year as budgets reach a close.

First up was Treasurer Stephen Gilligan. He wanted $10,000 to complete a system that will permit the town to accept payments online. He spoke for several minutes about the system and answered several questions about the project and how much it had cost. I think that his has been a poorly planned and managed project. Regular readers of my blog know that I’ve been critical of the high cost and poor accountability of the town’s IT expenditures; this project is a poster child of IT dysfunction. As an example, I point something that the treasurer said in his transfer request that “training is not contemplated” and “bug fixes are not contemplated.” Of course there will be bugs! It’s nuts not to plan for them. I’m sure we’ll end up paying more for this before we’re done, but I think we’re finally reaching the end of it. The change we made this spring to put IT under the Town Manager will help. I’m not interested in fighting this particular budget battle. I’m much more interested in preventing this type of purchase from happening like this in the future..) I proposed that we approve the transfer, include a comment that we think the purchase could have been done better and more cheaply, and require that future expenditures of this type go through the Capital Committee (and therefore, by referral, the ITAC committee). During discussion more than one member argued that the transfer be disapproved until the current spending has been further reviewed. My motion was approved 14-1.

The second request was from the Town Manager. Deputy Town Manager Nancy Galkowski walked through the $500,000 defiicit, the $280,000 in budget transfers, and the $230,000 in reserve fund transfers that were requested to cover it. The larger items included paying out vacation and sick time for several senior retirees in the police department, overruns in the fire department’s overtime department, and last year’s retirement of the director of human services. The DPW budget made up $200,000 of the transfer and Comptroller made up $80,000. Here is the handout with some more detail. There was lengthy discussion about how the town should account and budget for vacation and sick time liabilities. There was a lengthy discussion about how to more accurately budget the overtime budget in the fire department. I agreed with something that Charlie Foskett said. This is yet another reason to move from the current budget method towards a budget that shows “fully loaded” salary, health care, and retirement costs. In the current budget, town departments’ budgets show only salary costs. The health care and retirement costs are in separate buckets. That means that a department can find $50,000 for salary and hire someone, but the town pays more than twice that because of non-salary costs. A “fully loaded” budget would mean that departments would have to find the full cost of hiring in their budget, not just a fraction. The transfer was approved unanimously.

The committee gave the chair permission to transfer funds up to a certain amount, and up to $25,000 if the vice-chairs agree, during the summer in the event of an emergency.

Finance Committee Revotes Article 52

Before Town Meeting the Finance Committee met. Several issues were discussed. In particular, Ron Spangler presented an amendment to Article 52 that modified the membership of the School Facilities Working Group. His amendment was accepted unanimously.

The committee also discussed Bill Shea’s substitute motion for Article 52 that advocates rebuilding Thompson immediately. Mr. Shea was not present. The committee did not modify its recommendation, effectively rejecting the substitute motion.

Finance Committee Meeting – Article 18

Finance Committee met at 7:30 before Town Meeting.  Several items were discussed – upcoming reserve fund transfers, Town Meeting schedules, etc.

The only topic that was formally discussed was Article 18.  After some discussion, the committee unanimously endorsed the Selectmen’s proposed vote.

Finance Committee on Veteran’s Rink

FinComm met at 7:30 and heard an update to the Veteran’s Rink budget. It wasn’t a big change, just a forgotten line item that we talked about but hadn’t included in the sheet. I voted against the budget as I had last month. The budget ignores the capital needs of the rink. The rink needs a plan to cover the capital issues. The first time we voted, it passed only 7-5. This time I was the only person to vote against it. It’s funny the way votes work sometimes.

FinCom Hears Article 26 Again

(Black text is mostly objective, red text is mostly subjective in nature.) Finance Committee met, as is customary, at 7:30 before Town Meeting.

John Bilafer spoke to FinCom about it’s recommendation of no action on Article 26. I missed the very beginning so I’m not sure if he proposed a wording change or just a different interpretation, but the upshot was that the town could optionally choose to pay off OPEB while delaying funding the retirement obligation. That change removed at least one objection of FinCom.

However, question and discussion showed that the committee still didn’t think the legislation was necessary. If the town received negative reports from a bond agency because it wasn’t paying off OPEB fast enough, the retirement board could choose to delay the retirement payment schedule on its own, and the resulting money could be appropriated by Town Meeting towards OPEB. The proposed special legislation is not necessary.

The committee did not change its original “no action” recommendation.

Finance Committee Completes Report

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

Tonight was the last meeting of FinCom before Town Meeting. (FinCom meets for 30 minutes before every town meeting session).

First up was Superintendant Nate Levenson and CFO Susan Mazzarella to review the proposed School budget. Levenson walked through the budget rationale for most of an hour. It was followed by an hour of questions and discussion. Special education costs and cost controls came up repeatedly. There are items that have hidden the cost somewhat over the years, including retirements. There was discussion of strategies to keep students in-district, and strategies to keep students from needing special education. If you’re interested in the budget process, I highly recommend that you follow the link and read the budget. It’s a good document with a lot of information. You can see how the goals drive the budget decisions, and the limitations that constrain it all.

Town Manager Brian Sullivan then presented three collective bargaining articles, one for the special town meeting and two for the regular town meeting. Police and fire are still unresolved. The agreements are done with COLA raises offset by increased copay for medication and doctor visits, and increased premium contribution of 25% of the cost for new employees.

FinCom received additional information and voted to approve the DPW position change that had been removed on Monday.

The collective bargaining articles were approved 16-1. I voted in favor of them. I think that the several-year trend of these deals is headed in the right direction. The trend is not sufficient to avert a severe budget crunch at the end of the 5-year plan; I think that is why the vote was not unanimous. On the other hand, we have to pay competitive wages if we’re going to get good employees. If we negotiate too hard, we’ll end up with a different set of problems related to low-quality work. The other way to control labor costs is simply to have fewer employees. We’re going to have to employ fewer people and try to do more with less. It’s easier and more efficient to pay a few skilled people more money than it is to pay a lot of less skilled people less money. And, in some cases, we’ll simply do less.

Last item was to vote on the school budget. Several members wanted to wait for the budget to be approved by the School Committee before voting it, particularly as the board composition is about to change. Other members noted that FinCom only can recommend a bottom line, and that bottom line was very unlikely to change. By 14-2-1 the proposed budget was recommended. Debate got a bit testy on this one. I think it was late and people were restless. Also there was some frustration that the school budget is so late. There hasn’t been enough time to question and scrutinize and flush out issues. I voted for it on the basis of the proposal. If the newly elected school committee does something crazy, we can change our recommendation.