The Select Board and Finance Committee met jointly last night to review the revenue and expense projection for the next fiscal year, FY2011. The projections show that the town budget will be in the red (i.e expenses exceed revenue) by over $850,000.
The projections can be viewed in MS Excel format at this link The Finance Committee and Select Board agreed to use the revenue forecast, shown in the linked file, of $68,630,059 as the basis for next year's budget planning. These numbers are not certain ...
... as the Commonwealth may need to make additional cuts to local aid in order to balance their budget. There is no doubt that the state will have to make cuts to balance their budget. The unknown is where those cuts will fall.
The revenue projection was set at 1% increase for new growth in property tax and a 5% decrease in local receipts. About 50% of local receipt revenues are derived from automobile excise tax and new car registrations have declined.
Total expenses are forecast to rise about $1.745 million. The school contributions are projected rise by about $837K while medical insurance and pensions for town employees will increase about $414K. These categories constitute the bulk of the increase in expense. There is a modest wage increase for town employees included for FY2011 but no funds for an FY2010 increase. The contracts of nearly all town unions expired at the end of Fy 2009 and the town and bargaining units are currently negotiating new contracts.
Town departmetns have been asked to submit their FY2011 budgets and to look for opportunities to cut costs. As of this date, no mandated reductions in budget have been required of department heads.
That is the current state of town finances, what do you think about it? Tell us in comments.
Wednesday, December 9, 2009
Fiscal Year 2011 shows shortfall in town budget
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22 comments:
great analysis- hopefully the select board and fincom can start working w these numbers while anticipating the worst from the state's local aid projections. I hope we can continue to maximize our towns services while trying to be creative in the savings area
ps: yesterday's Standard Times oped on this issue of state gov & local aid: http://www.southcoasttoday.com/apps/pbcs.dll/article?AID=/20091208/OPINION/912080336/1003/TOWN02
has the new meals tax been taken into account?
I am shocked that NOW the town is going to be 850,000 short. Last year we had millions to spare and went on a spending spree.
Seems to me that every time contracts are being negotiated the town cries poverty. The second the employees take no raises, "money" is somehow found to spend on full day kindergarten for the schools and other perks/ wants.
The new meals/hotel taxes are in the budget.
2 months ago Dartmouth had a 3.3 MILLION dollar surplus. Now that it is time to adjust the town employees pay to keep pace with inflation the town is 850,000 in debt?
TO ANON 9:57 -
Since your memory is so good I am certain you also recall that that money was largely one time revenue and to use it towards salary increases - a recurring expense - would be a fool's errand.
Let me see if I can shed some light onto the funds alluded to here in comments. What we need to keep in mind is what fiscal year the money that we are talking about comes from. The town pinched pennies during FY2009 and put aside $500K in the event that state aid would be cut. As it turned out, the $500K was mostly not needed, there was a large (about $800K) savings in health insurance costs, and very little money was spent in capital items. The capital items were needed but the town took a very conservative approach and didn't fund them in order to keep cash in hand. At the end of FY2009, we had 3.3 million dollars left over in one time revenue. One time revenue means it is not available year over year for appropriation. The Fall Town Meeting was asked and did appropriate much of that money for capital expenditures which had been previously deferred and to bolster the Stabilization Fund. Some funds were set aside to fund the startup costs of full day kindergarten. That is what happened with FY2009 money, about $3.3 million.
The FY2010 budget is balanced and, if you look at the linked spreadsheet in the post, shows a slight positive balance of $26,907. All well and good for this year, FY2010.
Which brings us to FY2011 which does not begin until July 1, 2010. FY2011 total revenues will increase about $846K from FY2010. The revenue forecast for FY2011 includes a low estimate (1%) of new growth in property tax revenue, a $444K reduction in local aid from the state and an over $323K reduction in local receipts.
On the expenditure side, the total increase is over $1.7 million. A modest wage increase is included for FY2011($218K), medical insurance and pension accounts increase by $414K, school accounts by $836K and other expenses at 4% for the remainder.
One final note on inflation. Social Security payments which are tied to inflation did not increase this year. They got zero increase.
One final note on inflation. Social Security payments which are tied to inflation did not increase this year. They got zero increase.
Monthly Social Security and Supplemental Security Income benefits for more than 55 million Americans will increase 5.8 percent in 2009, the Social Security Administration announced today. The 5.8 percent increase is the largest since 1982. The 5.8 percent Cost-of-Living Adjustment (COLA) will begin with benefits that over 50 million Social Security beneficiaries receive in January 2009.
You must be talking about 2010 Bill, and I am sure since it just went up 5.8% they can handle a year without an increase.
So is it safe to assume town workers should be looking for 5.8 for last year and ZERO for next year? I am sure town workers would jump at that opportunity!!
To say there will be a shortfall for FY11 is somewhat misleading. People have to realize that budgeting is a process that spans the many months, weeks and days leading right up to the day of our spring Town Meeting. It all begins with an initial revenue and expense estimate.
We are prohibited by state law from spending more than we take in so we start with a very conservative estimate of possible revenues, consistent with likely reality . This is then juxtaposed with a pessimistic estimate of expenses across very broad categories, consistent with likely reality. The two necessarily result in a shortfall of some magnitude; such as this $800K figure. Soon the Fin Com will break down these broad categories into the 99 cost centers that comprise our Schedule 'A' and begin to review budget requests.
Over the coming months the Governor will offer some amount of state aid, the legislature will change it several times up or down. In the meanwhile the economy will get better or worse which means state sales and excise tax revenues will be more or less, resulting in that portion of our state aid to be greater or smaller than expected. Construction will pick-up or slow down increasing or reducing ‘new growth’ estimates here in Dartmouth and local fees and permit revenue may go up ..... or down. In short, we have no idea what the revenue will finally be come June 30th, 2011. That is one of the reasons why there is more or less money some years come fall when all the dust finally settles over the summer.
All the while we will be waiting to be told what the costs of union negotiations might be, what portion of school funding we will be required to pay. The latter can, and does, vary by as much as $1 mil from one year to the next based on factors we have no control over. Personally I believe the school funding numbers projected in this spreadsheet are way too low. This is not to say that the schools might receive more than they deserve, it simply means that our ‘portion’ of their total funding may be higher than presently projected, and the state’s lower.
As time goes on these figures will become clearer and firmer. Soon department heads will be coming to the Fin Com presenting their budget requests for FY11. These will have to be taken into account along with the available revenue guess-timate. All this has to be budgeted in the light of running a town with all of the infrastructure and equipment that must be maintained, upgraded and replaced. Also taken into account is the fact that our citizens deserve affordable parks and beaches. They deserve affordable schools of good quality and maintenance and our employees deserve livable wages and adequate tools to do their jobs.... AND we must not promise to spend more than the total we will actually receive 18 months from now. If someone could just tell us what the figure might be it would make things a lot easier. Failing that, between now and spring 2010 there will be wild fluctuations in these numbers, so I would not get too wrapped up in any one set of figures. It is, after all, a process.
Are there strings attached to state aid that is to be allocated to MNSS. Does the state require certain percentages be spent on materials for education or does it go into the school's general fund?
Dear December 11, 2009 8:30 AM,
School funding is set by the state in the form of a foundation amount. This is comprised of many factors some of which you mentioned. You can see them very clearly here http://finance1.doe.mass.edu/chapter70/chapter_10.xls
[ put our town code 072 in the yellow box ]
This 'foundation budget' is then funded from two sources ; us and the state.
Our portion is simply whatever we paid last year multiplied by what is called the Municipal Revenue Growth Factor [ MRGF ]. The difference between our portion and the foundation is the state's portion [ Ch 70 state aid ] . The problem for us in the MRGF.
This number is calculated by the state predicated on our local revenues. The more we take in, the larger the MRGF and the larger the portion of the foundation we are expected to pay.
The MRGF can fluctuate quite widely which is why it is so difficult to project what our actual costs might be.
Compounding this is that fact that the state ADDS to the MRGF a number designed to hasten us towards a funding goal the state has established for us. Following are the actual MRGF amounts for the years 2005 - 2010 :
104.93% ~ 106.04% ~ 106.57% ~ 108.55% ~ 105.22% ~ 102.58%
As you can see, the poor economy caused the multiplier to shrink, shifting the costs toward the state and making our local situation look better, a rising economy does just the opposite.
The numbers above resulted in year over year 'increases' to our local school funding requirement from a low of $370K in FY10 [ MRGF 102.58% ] to a high of $1.6 mil in FY08 [ MRGF 108.55%. ]
The irony is that with the increased revenue brought about by the meals / hotel tax comes an increase in the MRGF that will eat up a so far undetermined amount of that money. This makes actually knowing how much money we have available all the more uncertain.
Dear Dear December 11, 2009 8:30 AM,
I failed to fully answer your question.
There are no strings attached to Ch 70 monies. That said, there are minumum spending requirements for per-pupil spending for maintenance of the buildings and such.
The schools also receive >$10 mil in additional aid that is dedicated to specifics, such as special needs. Someone from the school committee can break that down for you better than I can.
I hope I have answered your question this time :)
Greg,
would it be feasible to attach strings to ch 70 funds at the state level. Perhaps all state aid must go to educational materials, such as computer programs, computers, text books and other misc. material.
This would allow salaries to be the only expense paid out by the municipality. Once educational expenses are paid for and upto date, then and only then would state aid be used to subsidize the salaries of schools employees
Dear December 11, 2009 8:36 PM,
Although your idea sounds logical, because of the way state aid is calculated from one municipality to another that approach is not possible under existing law. Take the cases of Dartmouth and New Bedford for example.
Schools are labor intensive operations with about 80% of their funding going for salaries. In Dartmouth the state’s portion of our school funding [ Ch #70 ] is 27.22% with Dartmouth residents paying the remaining 72.78% [ for FY10 ] . It would be iffy if we could make payroll if all the State aid had to be used as you suggest.
If you go to the URL in my previous post and enter New Bedford’s code [ 201 ] in the yellow box you will see where the state’s portion of their school funding is 85.97%, with New Bedford taxpayers paying only 14.03%. In this case they would have wonderful facilities, but no teachers.
In the wisdom of state officials, school funding has absolutely no connection to what it costs to run ‘a’ particular school system. Every school in the state gets EXACTLY the same amount of money for ‘a’ student at a certain grade level.... to the penny. This is why per pupil spending comparisons are mostly just so much nonsense. If a community has old and many schools, much money is wasted on utility and maintenance costs, money that is spent on education in another community with newer and more efficient facilities. This is why we have been spending money on making our school buildings more energy efficient, while closing other buildings entirely – to free up otherwise wasted monies for education use.
Likewise, school funding levels are determined by the number of students attending. Since 2005 Dartmouth school enrollment has fallen by 172 students. At an average of $8,762 / student [ FY10 ] this represents a huge loss of funding yet the costs of running the school system go on and upward without reduction. The teachers are still there, the buildings are still heated and maintained and so on. I could go on with example after example but you get the idea.
This is a silly way to fund education, but this is Massachusetts after all :)
As "silly" as some might think the Massachusetts school funding formula may be, it is far, far better than the systems used in other states. Our formula is complicated and certainly imperfect, but at least our state has tried to get money to the districts most in need. Defining "need" is problematic, of course. Many states don't even do that much.
The budget process for both the municipal services and the school department is far from "state of the art". Frankly, the way it is compiled (despite the hard work and sincere efforts by many) would likely get you fired for incompetence in the private sector.
Certainly, issues like union contracts create havoc. The ability to react prudently to changing revenues, population shifts, student/teacher ratios, unforeseen expenses, etc.; is obviously limited compared to what can happen in the private sector. As always, the town is placed in the position of projecting a budget that can turn out radically different from reality. In the end, it is wait and see. Don't panic, its way to early.
The much-ballyhoed "private sector" almost destroyed this country with its greed. Let's be honest: The private sector is no better than - or efficient than - government. They both are run by people, people with human flaws.
China has a simple and effective way of dealing with cheats, execute the bastards. This is communism at work. We could use a little of China's simplicity here in the U.S.A. Just line the bad guys/girls up along Wall Street and shoot them. Sure would catch my attention.
It's truly not fair to read are these posts concerning where we will find the money to keep our town from cutting or eliminating services, while the Federal elected congressmen/women and U.S. Senators are spending money that we don't have. A trillion dollars for stimulus programs, a trillion more for National health care, what about the national debt??That is what I care about.
So Obarma, is sending more troops to fight and die for Afghanistan, what are we doing? Terrorist are training in the U.S. and we are engaged in a surge to control insurgents from forming inside foreign countries. We need a serge of troops to sweep through the streets of New Bedford and get rid of all the guns and drugs. Catch the bad guys/girls and shoot them all. Ooop's your right, we can't do that sort of thing here in the good U.S. of America. We'll just sit back and let all the city/town gangs take over our steers, while Wall Street business people steeling our money. Banks ( Acorn) giving out loans to people who could never afford to pay the money back, so it's put onto the backs of the law abiding, hard working class of people who pay a fare share of taxes, and those who we are told make too much money, so they should pay more so that the people who can't or don't want to work, or make less than 40,000 dollars, get more for doing less. Wow, I'm tiered of this writing stuff, hope I didn't piss anyone off.
If you doubt a revolution is coming, than tell me why some States are unable to keep enough ammo in their stores. Sale of hand guns and rifles are up 35%. If you can't see the handwriting on the wall than you should get another pair of glasses. People are getting all worked up over nothing, or are they??
Yeah Mack, let the disabled DIE like in China, let's not care for those WHO cant. let them die off too...newsflash mack...I believe we should care for those who CAN't...not those who wont..but who cant. YOU sir must be libertarian..I can smell your type from a mile away. NO UNEMPLOYMENT INSURANCE,DISABILITY INSURANCE...NOTHING its all a waste...hahaha until YOU NEED IT...and believe me SOMEDAY you WILL!!!!
This blog brings out three things in this town; 1) good dialogue and good ideas, 2) bad dialogue and bad ideas, and 3) idiots.
Make that 4. The union supporters.
This town always cries poverty come negotiation time. Then suddenly they find money as always.
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