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

We had a productive meeting tonight, and even finished 4 minutes early – 9:56PM.

The first item was a hearing about Article 55, about creating a committee to look into trying to add Arlington as a stop on the “Liberty Bus” for tourists. I think we asked for the hearing because we thought this was a funding article, but it turns out it was only a committee, not an appropriation. With no money involved, it was a quick hearing.

The personnel budget was up next. This budget includes a new position at about $40,000 salary who will be responsible for managing the health insurance questions, answers, and administration in town. This involves things like helping employees and retirees with questions and making sure that the monthly billing accurately reflects the monthly enrollment. (Births, marriages, spouse job changes, etc. all lead to a churn that needs to be tracked).

When I heard about the new position I asked if there was any sort of quantitative backing for it. Is there any record of the number of walk-in visitors? Nubmer of phone calls? Number of missed enrollments? Back-of-the-envelope demonstration of the savings to the town, or an outline of the services being provided? I didn’t see one. When I need to convince my boss that we need a new hire, I have to make the case. I have to do the homework and explain the need and the costs, the pros and the cons. The decision to hire or not hinges on whether or not it can be justified.

It frustrates me that the town does not make decisions this way. I had the same complaint last year about the decision to create a new revolving fund and hire someone from that fund. That position may be a good one. This new insurance poistion might be a good one. But we don’t have the data or rationale to make the decision!

There’s another element to this that raises the stakes considerably. $40,000 is the salary. But, the town will pay 85% of the person’s health care, and pay for the person’s retirement, and pay for the person’s health care while they are retired. Really, we’re talking about adding something like $100,000 to this year’s budget.

One final point: the salary cost for this position won’t appear in the personnel budget. It’s being billed to the health insurance budget. I can see where the data might justify this, but again, the data isn’t really there to evaluate.

The budget was approved with two dissenting votes, including mine. (15-2 I think, but you’ll have to double-check the minutes).

The Capital Planning Committee was up next. They gave a detailed presentation that, with questions, lasted longer than an hour. They reviewed historical spending, talked about planning philosphy, and reviewed several of this year’s individual line items. We reviewed spending on libraries, schools, sewer and water, roads, fire, and police. There was also discussion of the Veteran’s Rink.

The Capital Committee made it clear that it did not think that the anticipated capital expeditures could be covered by the enterprise fund. This will be an issue for a while, unfortunately.

The capital budget was recommended unanimously.

The committee discussed Article 61. We reviewed a handout from Charlie Foskett. The gist of the issue is that the budgeting for health care is as close as it reasonably can be to actual expenditures. Furthermore, even if you try to correct for the inaccuracies, the budget doesn’t improve. Voted no action unanimously.

The Public Safety Support Services budget was passed unanimously.

The Veteran’s budget is up again because of increased veteran’s aid. The presumed causes are Iraq and increasing number of retirees. Passed unanimously.

The only budgets approved on Monday were the Treasurer’s – his budget, Parking, and Postage.

I sit on the subcommittee that reviews these budgets. It wasn’t easy. Treasurer Stephen Gilligan’s requests exceed the 4% of five-year plan by a significant amount. Also, his proposed budget included moving the payroll department from the school budget to his budget. There was significant wrangling over the last few weeks.

The treasurer didn’t have an agreement with the superintendent on the payroll move, so we recommended against that move, at least for now. We also recommended against increasing the number of hours for a couple of positions within the budget. Finally, we approved a portion of the requested increase for legal fees to be paid to former treasurer John Bilafer to help execute tax liens and such.

In the end the budget goes up 4.5%, but the postage and parking budgets go up 3% and 2%, so it works out to 4.00% increase between the three.

I voted yes, but just barely. This increase is too much. I remain hopeful that the treasurer will move on several cost-saving measures. No one voted no on the budget, but there were others who share these concerns and abstained or voted yes with an eye on future changes.

On Wednesday the first hearing was from the Council on Aging. They have two warrant articles. The first is a request for $7500 to fund jobs for the town where senior citizens can work off part of their tax bill. Last year I voted against this because I didn’t think it made sense to fund these positions outside of the departments where the work is done. I still think that is a better idea, but at $7500, it just isn’t worth arguing about. Items like the Minuteman Voc budget or the town’s use of IT are better uses of my time. The $7500 was approved.

The Minuteman Senior Services was the second article. They wanted $9200 as a “fair share” of the more than $2 million in services they provide. Most of the group’s money comes from the state. Arlington has declined to pay this for the last few years because of budget pressures, but it was approved 15-2 for ’08. I voted yes. I was swayed by the argument that community support makes a difference when asking for other funding. We’re getting good services return on our dollar here.

I presented the Comptroller’s budget. There were two significant changes. First, there was a retirement in the phone operator area, so we cut the budget from 1.8 FTE to 1.3 FTE. That 1.3 FTE should be enough to always have a human being available to answer the phone. The second was as shuffling of items in the expenses to more accurately reflect spending.

It’s worth pointing out that the consulting line item, budgeted at $3000, is again overspent – probably by more than $25,000. That would continue a trend of more than $250,000 in overspending on that item over the last 5 years.

The 200th Anniversary Committee returned and presented their budget in more detail. When we voted the budget I offered an amendment to fund $1000, but the amendment lost 3-14. The amount of $6200 was approved 13-4. I think the committee is doing a great job, but I’d prefer that taxpayers didn’t pay for such items. Private funding is sufficient. And yes, Steve: I’ll gladly write another check!

The public safety Adminstration budget was approved as presented.

The police budget was next. The lively topic of discussion was the overtime budget, which is overspent again. The overtime is funded by the unspent salaries on vacant positions. This lineitem shifting has been sufficient and the department hasn’t needed a transfer. I agreed with members who argued that the lineitems should be changed to reflect reality. The chief and the manager can run the department exactly as they have been doing, but the budget should show the “real” numbers, not a fiction.

If I had my way we’d budget the salaries less and overtime more, which is exactly how the money is being spent. For whatever reason the committee chooses to budget regular salaries that no one expects to spend and budget a level of overtime spending that no one expects will be correct.

UPDATE: I got an email that this wasn’t clear, so here are the numbers. Overtime has been budgeted at $250,000 for the last three years. FY05 actual overtime spending was $480k, FY06 was $423k, and FY07 is on pace for more than $400k. The total police budget does not go over because the chief pays overtime out of the lineitem marked for salaries. He has salary money unused because there are always vacancies – retirements, job changes, etc. The FY08 salary lineitem is $4.2m, but everyone knows that won’t be entirely spent – there will always be a vacancy (or 2 or 4) because of turnover. If I had my preference we’d fund the salary item at, say, $4.0m and overtime at $450k. The bottom line is the same, the chief has the flexibility that he needs, and the budget is a better, more accurate document.

There was a motion to increase the lineitem for salaries, and increase the bottom line by the same amount. This failed without a single supporting vote. I wonder what the vote would have been if the motion was a zero-sum change that shifted money between lineitems. The budget was then passed.

The issue will come up again with the fire department. The difference there is that the fire department’s overtime spending has broken the budget and forced several fund transfers.

The inspectional services budget was approved.

I was too pooped/distracted to write after either meeting this week – the notes are late, but here they go. Minuteman Voc figured prominently both nights so I’ll start there.

Superintendent Bill Callahan, Assistant Superintendent Tom Markham, and Arlington’s representative to the Minuteman School Committee, Laura Morrissette were there on Monday to present and answer questions. I’m going to condense almost two hours of discussion into a few paragraphs.

The budget is a 3.8% increase over last year. Arlington’s enrollment is down 10%. Because of the district funding formula, Arlington’s assessment went up 11%, $400,000, to $3,276,622. That is, of course, far outside the 4% in the 5-year plan.

• Superintendent Callahan is retiring. The board is conducting a search.
• The school is working to reverse the enrollment slump. The slump is particularly in the freshman and senior classes.
• The school can handle 900+ students and is far below that number.
• The board is considering reducing the 20+ programs to a lower number in order to reduce costs.
• Class size is between 15 and 20 depending on the class area, with 7-8 for special ed resource rooms.
• The state continues to fail to fund what it once promised. For instance, the law requires that the state fund 100% of transportation costs, but hasn’t met that in ages. The budget hopes for 80% funding.
• Most of the increase in the budget is in salaries, while all of the academic areas were cut. There are some outstanding questions about the salaries that I’m waiting for answers on.

FinComm had previously heard that Arlington was blocking Minuteman from visiting or recruiting. This prompted several questions. It came out that Arlington was the only school denying access to 7th and 8th graders. The degree of cooperation of the 16 towns varies, but Arlington was the most restricted. This was controversial, and I expect it to come up when the school budget is heard.

There were a zillion questions about why the funding works out the way it does. I’ve spent hours looking at this stuff, and I’m following up on a few inquries. It’s not easy to figure out the Minuteman finances. Enrollment has been a challenge for years. They’ve developed a number of part-time programs to make better use of the capacity, including out-of-district students, placing teachers in middle schools, and after school programs. Sorting through the various costs and assessments is a real challenge.

• The Full Time Equivalent student (FTE) is the unit that is most commonly used. Arlington has 156 FTE high school students, and 171 FTE in total programming. Minuteman has 445 in-district FTE high school students, and 635 in-district FTE programming. There are 245 out-of-district FTE students, for a total of 882 FTE.
• Note that barely half on Minutman’s budget is for in-district high school education.
• The ’08 budget is $16.7 million. Basic division shows that as $18,900 in cost per FTE pupil. But, that includes things like the 125 FTE in middle school teaching that is only $3200 per FTE! When you take out some of the part-time programs, the per-student cost of regular high school students starts to approach $25,000 per year. There is more research to be done here.
• Out-of-district students pay between $13,500 and $15,500 in tuition.

The hearing finished on Monday. On Wednesday, FinComm discussed the budget.

• There was discussion about the long-term future of Minuteman. It seems doubtful that Minuteman can attract enough students from the 16 towns. Attracting another town also seems like a long shot.
• There is no realistic way to get out of the district – legislative action and even a statewide petion were discussed.
• Minuteman is doing a good job of controlling costs (2%, 3%, and 3.75% increases) but the Arlington assessment keeps going up by more that 10% each year.
• A significant part of the problem is the state government. The state encouraged towns to create schools, and offered 50% funding as a carrot. It has not lived up to its end of the bargain.

In the end, approval of the budget was recommended by a vote of 12-5. I was one of the five that opposed the budget. I appreciate the educational opportunities that Minuteman offers. But, there has to be another way. It just doesn’t make sense for Arlington to pay so much per student and subsidize other towns’ students. I didn’t vote no because I had a ready alternative. I voted so that Minuteman, the state, and the voters of Arlington know that the status quo is not acceptable.

Finance Committee met for the first time in a couple weeks after being cancelled by ice, snow, and holiday. The members listened to and questioned a parade of town officials and citizens as several warrant articles were heard.

First up was the Director of Assessors Bob Greeley on Article 64. The state requires the town to do a physical inspection of all property every nine years. The plan is to inspect the town’s 14,000 parcels ($25 each) and 500 “personal property accounts” ($40 each) over the next two summers and then compute the assessments in time for the FY10 deadline. He requested $325,000 to augment his current balance of $61,000. FinComm approved this unanimously later in the evening.

He also responded to a question about Symmes. In January FinComm had heard that Symmes housing might initially be rented rather than sold, and would therefore be assessed at a lower value. The assessor explained that legally he had three methods of making an assessment: market, income, or cost. Houses were done by the market assessment; there are plenty of home sales per year to use to extrapolate market value. Rental properties rarely change hands in Arlington so he has to do an income assessment, based on the rental property’s income. The income method leads to a lower valuation than market method. The cost method required engineering work and was not commonly done.

He gave a hypothetical example of a 126 unit property in town that is assessed at $22 million by the income method. If it converted to condo it would be perhaps $40 million using the market method. The bottom line was that he agreed that Symmes would be lower revenue for the town as a rental property.

John Bilafer called in on a speaker phone, and Richard Greco, the retirement board administrator was there in person to discuss several articles.

First up was Article 26. Background: As you recall, Arlington has to recognize a $170 million liability of health benefits for current and retired employees. This was required by the GASB accounting group and affects all governmental bodies. Through the magic of accounting, if Arlington works to pay this down aggressively, the liability is valued at $110 million. To get that valuation the town would have to pay approximately $5-6 million/year. Arlington has created an OPEB committee to study ways to fund this liability.

The town is currently aggressively paying into a fund to cover its pension liability and has been doing so for 20 years. It is anticipated that the liability will be covered in the year 2023, and at that time the town will be able to pay much less for pensions – it will be paying only current costs, and no longer working off a debt. Note that the pension liability is different from the health (aka “GASB”) liability. It’s easy to confuse them, and you have to be careful about which one you’re referring to.

Article 26 seeks home rule legislation that would permit the town to pay less into the pension liability, about $3-400,000 less annually, and pay off that liability over a longer period. The theory is that the town would use that money to help address the GASB liability. There were several questions asked of the former treasurer of the possible benefits and risks of this plan.

Later in the evening the group discussed the article and the discussion followed the same vein as the questions earlier. It was noted that the pension liability is one that the town is legally obligated to fund while the GASB liability has no such legal requirement. The motivation to retire the GASB liability is that it would presumably make Arlington more appealing to bond rating agencies and protect/improve Arlington’s bond rating. Several members of the committee argued that since all towns and cities and states have this liability that it would not weigh against the town. It was further argued that since larger towns and cities are affected one year earlier by the ruling, that there was much to learn in the year about how ratings agencies viewed GASB. We could delay this action for a year while the issue matured with little (if any) risk to the town’s credit. We could then make more intelligent decisions on what debt to pay down first and how quickly.

It was also noted by several members that the retirement board may not be the best administrators of the the OPEB fund given their past performance. There was concern that this legislation would irrevocably link OPEB to the retirement board. Furthermore, the legislation recently proposed by Governor Patrick would sweep Arlington’s retirement fund into the state fund. (Arlington’s retirement fund has earned 3% less than the state on average over the last 5 years, and thus qualifies as underperforming and is targetted by the legislation).

Finally, it was noted that the OPEB committee had not yet reported and it might have a different angle on the plan. For all of these reasons, a recommended vote of no action was approved unanimously.

Earlier in the month FinComm had heard from Gordon Jameison on Article 27 which was another article on OPEB. FinComm asked Mr. Bilafer’s opinion on the article, and he thought it was superfluous to the OPEB committee’s work. With the forthcoming OPEB report, FinComm also deemed this article as premature and unanimously voted no action. Perhaps it will be appropriate (or refined) for next year.

Mr. Bilafer spoke to Article 56. This article has been approved every year for decades. For retirees with 25 years or more service in Arlington where the pension has fallen to 50% of the current office holder, a raise is given on the first $12,000 of the pension. This amounts to a few thousand dollars per year. It was approved by FinComm. I’m embarassed to say that I didn’t ask explicity or record the actual cost to the town. I believe that it is $36,000 this year, but I have to double-check.

Mr. Bilafer spoke to Article 57. This is about the specific financial vehicle the town will use this year for storing money to be put towards the OPEB liability. The town has acted on this in the past, but for reasons that I don’t totally understand we can’t put our money in the actual OPEB fund until December 31, 2007, so we need a piggy bank, cookie jar, or mattress to put the money in until then. The actual money has three sources: money previously saved by past Town Meetings, anticipated payments from the federal government related to Medicare Part D ($350k) and the money that retirees are paying as a result of increasing their insurance co-payments from 10% to 15% ($155k/year). Later in the evening the board approved this in principle in anticpation of a more detailed motion to be voted on in the future.

A couple members of TAC talked about Article 51, George St. sidewalk by Dallin school. They want to make a narrow, one-way private road into a town-owned, one-way road with a sidewalk for kids to walk on. The warrant article uses words like “eminent domain.” There was no sense of how much money this will cost, if anything, and it wasn’t completely clear that the DPW was ready for the road even it was obtained. Overall, this one came across as one-quarter baked; there are too many unknowns for FinComm or Town Meeting to take action on it. Perhaps there will be progress over the next few weeks, but I’m guessing this goes as no action in April.

Roland Chaput spoke to Article 59, requesting a $6200 appropriation for the 200th Anniversary Committee. He reported on activities, planning, and fundraising. FinComm was impressed with the progress that had been made since the last presentation. The board decided to wait for more information before voting. I signalled that I was going to vote no because it was too much ($1000 seems more in line). I love the work the committee is doing; I like it even more when it’s done through private donation. I will put my money where my mouth is and send them another check.

Annie LaCourt spoke to Article 18 which would split the IT group out from the Comptroller and put it under the Town Manager. She explained how it would put the IT group on its own rather than a part of another function, on its own footing, and at a level where will be more able to serve all of the departments. There was discussion about integrating the school’s IT group. There was discussion of what level and skillset the IT leader would need and the costs that might be saved. FinComm may take a position on this if it determines that there are financial issues in play.

The meeting closed with a review of recent statehouse activity. Alan Tosti recommended that everyone review the municipal legislation put forth by Governor Patrick.