Why is a plan needed?

We have been having a little discussion here about what plans are required and which are being worked on at present. I would like to take a step back and address why I believe this fiscal plan is needed. Up to this date, the town has been reacting to shortfalls in the yearly budget. First, we took our reserves and spent them to fund on-going operations of the town. When the reserves were gone, we starting asking the voters for overrides, warning that services would be deeply cut if the override failed. It did and some cuts were made. A large part of the DPW expense was moved to the Solid Waste Enterprise fund. Fees for that service and others in the schools and town were introduced. Finally, other overrides were put forward amid the same warnings of deep cuts to services. This spring, a modest override passed and the town has a few months of breathing space ...

...before next year when we will face another shortfall. All these activities share a common feature. They are reactive. The shortfalls are at hand and measures are taken that react in the short term. But our fiscal problem is not a temporary situation, it is due to the fact that our expense growth is exceeding our revenue growth year after year. For reasons which I have written about here and here, it is difficult to raise revenue to meet the expenses. The solution is to cut the rate of growth of expense to within that of revenue. If you will concede that point for the sake of argument, then the next question is how much do we need to cut the rate of growth of expense? What is does that reduction of the rate of expense growth equal in dollars and where can we find that in the budget? That's where a forward looking plan is crucial. By estimating our revenues and expenses right now, we can begin to proactively make changes to our spending in order to avoid future shortfalls. It will tell us how much of a deficit to expect and where we can focus our efforts to eliminate it. For example, changing to biweekly payroll can save the town some expense. That savings will be modest and should be pursued but it will not cover our FY10 shortfall. Negotiating a less expensive health care package could save a lot. So when making decisions for collective bargaining, a fiscal forecast can inform what we ask for. (Let me caution that, to my knowledge, these are examples and not a position that the town is taking in current contract negotiations) In a few short months, the Fall Town Meeting will be upon us and I think that there will be requests to use reserved funds and departmental turn backs for on going operational expenses. Back to the reactive mode! A fiscal forecast will allow us to take a longer perspective on the use of those funds. How does spending that money this year affect the next? Will we need those funds for FY10? I can't tell you right now because that information is not readily available. A multi-year fiscal forecast is needed to answer these questions and that is why it must be completed as soon as possible.
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A beginning

Three members of the Select Board met briefly today in order to approve and sign $2,186,000 in short term notes at an interest rate of 2.5%. These notes will provide capital primarily for sewer and water projects. The meeting lasted about 10 minutes. The bond issue was the only motion entertained. I did ask about the financial forecast that has been mentioned here. The Executive Administrator gave me a copy of the current draft. While it is a start, ...

... it is still obviously incomplete. I am told that the forecast will be worked on with completion sometime this fall. There is an introduction which contains a few items of note. First, "No new services have been incorporated into this forecast", and "Annual cost increases for the town's general fund averaged seven percent per year while total general fund resources grew at four percent." and "Net school spending requirements of the State Department of Education (DOE) is a major cause of concern for the Town of Dartmouth. It is also projected that spending requirements per student from the DOE will continue to grow, coupled with the enrollment, the projected school department appropriation levels could reasonably be above our estimated available resources."
After the introduction, there are revenue projections and assumptions, followed by expenditure projections and assumptions. This is where the report starts to get sketchy. More work is needed in these sections. This was given to me with the caveat that it is an incomplete work. The final couple pages are where the rub is. They show that the projected revenue is less than the projected expenses from FY09 on out to FY17. In FY17, the projected shortfall is $22 million. Actions needed to close this gap are not developed yet.
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What would a plan look like?

I have been looking around at different town websites and I have come across a financial forecast on the Town of Barnstable site that contains the elements that I think the financial plan mentioned in the Town Charter and DOR report envision. The link to...

... that report is here. Obviously something like this takes a good deal of time to prepare. However once done, it can be updated with much less work. I would like to emphasize that having this plan does not solve any problems. It just allows us to recognize and react to issues that the forecasts seem to present. As with any plan, the reality of what actually happens is changing and so then the plan must change. This is not a failing. A financial forecast is a tool, not an end in itself.
By the way, the Town of Barnstable website is great and is a model for what I would like the Town of Dartmouth site to be. Take a look at it here. It has a wealth of information, even video of all the various meetings under the Video on Demand tab at the left.
When I first was in charge of starting up power plants, the schedule was a huge document that took many weeks to compile and revise. But half way through the project, due to late delivery of components and construction delays, the original plan bore no resemblance to what had actually happened or was going to happen. But because it took so long to revise and produce, it wasn't changed. Computers and software changed all that. By linking tasks to their precedents and antecedents, we could input the delays and see how that affected the overall plan. Then we were able to come up with work arounds for some issues that helped to return us to our schedule. The same thing is possible with a financial plan. Some items will increase more than expected, some less, and by inputting that into our plan, we can see the impacts and try to find ways to accommodate them.
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What IS a plan?

Our town administrator, Mr. Gagne, has responded to the opinion letter from Ms. Days about a week ago. You can find his response at this link. In reading the two letters, I am struck that they don't seem to be...

..talking about the same thing. Ms. Days talks about the requirements of the town charter (Section 5-3) which says,

The budget message of the executive administrator shall, include, specifically, projection of the fiscal and financial needs of the town for at least the next five fiscal years, or such longer period as may be deemed appropriate, both as to income and expenses, as well as any substantial financial expenditures contemplated by any department, committee, or board during such period, including budget programs related to infrastructure maintenance, improvement and expansion. The message shall also include a forecast of any fiscal trends which the executive administrator believes are likely to have an affect on the town’s revenues or expenses.

The charter says that the budget message will be an annual submission by the Executive Administrator to the Finance Committee and town.
Mr, Gagne's response, while listing a variety of planning documents and reports, does not mention the budget message as it seems to be envisioned in the Dartmouth town charter. It is this budget message about which Ms. Days was inquiring, "Neither our long-term revenue projection (which we do have) nor a complete long-term financial projection, the budget message, (which we don't have) constitutes the entire five-year plan". I wrote in this post that the plan, as envisioned in the charter, is being worked on but still incomplete. After reading Mr Gagne's letter, I am not sure we were talking about the same thing. I will continue to inquire about it and let you know here what I find out.
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Contracts and costs

There have been a couple of opinion letters in the Standard Times recently addressing issues of collective bargaining. Selectman Joe Michaud wrote here and Police Brotherhood president Mr McGuire responded here. School Committeeman Phil Lenz weighed in at his blog here. Since these issues are being brought forward,...

...I will chime in as well.
On the issue of leap year overtime pay, the total amount involved is small, a few thousand dollars. As I understand it, the issue is that the additional day changes the overtime pay because of the added hours in the regular salary calculation. I feel that the issue was settled equitably by agreeing to keep the overtime compensation the same as that for a non leap year. I may have stated this incorrectly and if so, please set me straight in comments.
The biweekly payroll issue is an opportunity for the town to save money and, as I see it, does not have a significant impact on the employees. Here is the issue. Most payroll companies, like ADP for example, can do payroll for the town but they cannot do it weekly. These companies are set up to do biweekly payroll. The town could save money by having fewer employees and spending less time in processing payroll if they went to one of these outside companies. The employees would have to change the way that they budget but would get the exact same pay as they do now. Changing the payroll timing for some employees but not all employees results in higher costs since we have to maintain the current system while partially implementing the new system. So in order to make the transition, the town needs all employees to agree to the biweekly payroll at the same time. This change could be made when each contract is up for negotiation or at any time by mutual agreement. I don't know if this has been formally presented to the represented employees, but as I said, it will result in significant saving to the town and that means funds are freed up for other uses. I agree with Mr. Michaud on this one. We need to move to a biweekly payroll and there is no compelling reason not to do so.
I think Mr. Michaud understates the influence that the Select Board has with the School Committee. The Select Board, through the Executive Administrator, sets the funding for town departments. While we are limited to maintaining required net school spending, the Select Board can and does have a say in how much funding the schools get. That is a powerful tool. The Select Board is also charged with deciding to put override questions to the voters. This is another powerful tool. Last year at Select Board workshop sessions, Diane Gilbert raised reservations as to the form of the override question put forward by the school department. She wanted to propose a lower amount or break up the question into parts. Mr. Michaud and the rest of the board declined to do that. I think many now feel that Ms. Gilbert's approach may have been better. We will never know. I suspect that the Select Board may see override requests from the school department in the future. How those requests are handled will have a impact on the influence that the Select Board has on School Committee decisions.
Collective bargaining is a fact of life and, at present, I think that the benefits that have been afforded to our public employees are out of line. The town cannot continue as before and I have called for shared sacrifice by all the stakeholders in town. That includes the town employees. If there are no funds to pay workers, we will have layoffs. Another form of government won't change that fact and whether the workers have collective bargaining agreements won't change that fact. This will have to be addressed as the contract come up. The results of those negotiations will determine how the town staffs departments, whether some services are dropped, and whether some tasks are outsourced or privatized.
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Broadband connection correction

Frankg has written to me to correct my statement at the Select Board meeting tonight.
Here is what he forwarded to me

Q: Does this have anything to do with the Digital Broadcast Transition?
A: No, and it´s important to understand the difference between this change and the Digital Broadcast Transition. These are two unrelated events. This change to your service is driven by a desire to strike an appropriate balance between the interests of our digital cable customers and our remaining analog customers. The federally mandated Digital Broadcast Transition in February 2009 impacts over-the-air broadcasters, but not cable companies. Every television connected to Comcast cable will continue to work after this change to the way broadcasters transmit their signals. Because we´ve pledged to continue serving both analog and digital customers, only those using an antenna to receive over-the-air signals will be impacted

Thanks to frankg for the info. I'll look into the ...

... future impact of this transition and update you in future posts
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Select Board meets tonight, random thoughts

The Select Board is meeting tonight at 6:30PM at the Town Hall. There will be an executive session prior to the televised meeting to discuss ongoing labor negotiations. Not much on the agenda,...

... application for one day liquor licenses, disturb and obstruct streets for utility work, a new pole location, application for a constable license, citations to high school students for winning a percussion competition and charitable work. I meant to bring the agenda with me to work but forgot, so I'm listing this from memory. If I missed anything I apologize now.
The Dartmouth Education Foundation's fundraising walk had some good weather and was well attended by the reports that I received. I was working on Saturday and could not attend. Thanks to all who helped to organize the event and those who contributed or attended.
An article today in the Standard Times highlights our refuse district which is a boon to our town. Kudos to Mr Vincent who has been instrumental in its success and was honored for his role at a function at the district on Thursday. The facility is a gem and tours can be arranged by calling the office (508-763-5924).
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Capital expense?

One of the issues that is sure to be before the town given the current tight budget situation is that of borrowing for capital expenses. The FY09 budget included borrowing for upgrades to HVAC equipment, dump trucks and loaders, school windows, and a new roof for the library. Also shown on the capital expense report were police cars which ended up being funded from the tax levy rather than by borrowing. The question is what constitutes a capital purchase ...

...and what is an operating expense? The Town Meeting voted to provide $350,000 to the school department for textbooks citing them as a capital purchase. But are they?
My feeling is that the police cars and the books are operating expenses.
The police drive their cars almost 24 hours a day and rack up lots of miles in a very short time. The minimum number of police cars that our town should purchase every year is probably at least 2, some would say up to 4. Since these cars quickly reach the end of their usable life and we need to purchase new ones on a yearly basis. I don't think that borrowing is a wise way to meet this need. Funds from the tax levy should included in the operating budget to replace 2 cars every year.
Textbooks are also an operating expense in my opinion. Schools need textbooks and they have to be periodically replaced. Either because they are worn out or they are outdated. The state Department of Education (DOE) takes that into account when they calculate their foundation budget. Link here for how that is done. The budget calculation allocates a sum for instructional technology that is included in the foundation budget every year. That indicates to me that the DOE regards instructional materials and technology as an operating expense. I think that funds need to be budgeted for instructional materials, just as should be done for police cars. Some years, the amount may be only for replacement of lost or damaged books and some years, a higher amount will be needed to replace a series of books. But in the long term, the amount should be fairly constant with other items added in such as funds for replacement of computers, software and other instructional materials, higher in some years and lower in others. Now, some will say that funds are budgeted but not enough for the needs. If that is true, the budget should be increased to meet the need for this vital operating expense.
Police without cars and schools without books are not much use. There is no sense in hiring police if we can't put them on the roads or having kids attend schools without adequate instructional materials.
As always, tell us what you think.
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Personal Contracts Limited

The Select Board and Personnel Board met jointly yesterday to discuss personnel bylaws and personal contracts. The town currently has 21 personal contracts with employees. Last year, the DOR reviewed Dartmouth's government and recommended that personal contracts be limited in number. The discussion yesterday was which positions should continue to have contracts. The Personnel Board has pointed out that ...

... there is no particular advantage to the town in having people with contracts rather than at will. The Select Board voted 4-1 to limit personal contracts to the Executive Administrator, Budget Director, Police Chief and Director of the Department of Public Works (DPW). I voted against the motion. I have no problem with the first three as I believe that multi year contracts for those positions are specifically allowed by statute. The DPW director is not and I do not support giving a multi year contract to that position. The Library Director is also allowed by statute to have a multi year contract if approved by the Library Board of Trustees. The remaining 16 positions which were previously offered contracts will continue as at will employees under the previous terms of their contracts and the Personnel bylaws. There was some discussion as to how to transition them to different terms and it may require an interim contract but that was only briefly mentioned. The problem is that some contracts have automatic renewal clauses and these would seem to carry their provisions forward unless superceded by a new contract which changes the terms of employment. Other contracted employees have differing terms in their contracts and in order to get all to the same terms may require the interim contracts. Those could then be allowed to lapse and the employees would become at will. More discussion is needed on these issues.
On the issue of the Personnel bylaws, it was generally agreed that the benefits provided by the current bylaw exceed those generally afforded to private company employees and should be brought in line with current practices. The Select Board will work with the Personnel Board through the summer and get a revision of the Personnel bylaws ready for the Fall Town Meeting. I'll keep you updated on the progress of that effort in future posts.
The Select Board also agreed to retain Mr. Greenspan as a labor negotiator for talks with represented employees. The Police Chief and Executive Administrator have been handling the negotiations with the Police Brotherhood and Dartmouth Town Employees Association currently. These two unions have been without contracts for FY08. Mr. Greenspan will probably not be involved in those talks as they are on going. The town is trying to align the termination of all contracts for the end of FY09 and Mr Greenspan would take up his role at the beginning of future contract talks
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New assistant school chief named

Ana Riley has been named as Assistant Superintendent by the School Committee.Link to Standard Times article is here.
Ms. Riley is currently a middle school principal in Fall River. Click here to read on!

Update on Fiscal Plan

Yesterday I posted that the forward budget process seemed to have been abandoned. I asked our Executive Administrator and Budget Director about that in the Select Board workshop session yesterday. They assured me that the plan is going forward and will be available sometime this summer. With the override questions, FY09 budget,...

... and Town Meeting articles being top priority in the past few months, the fiscal plan has taken a back seat for a while. They are working on the multi year plan and feel that many of the components, such as revenue and expenditure forecasts are in place to produce it.
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What's the Plan?

The Standard Times ran a opinion letter from Beverly Days this morning which raises some very excellent points. Namely, that our town charter requires a five year financial projection and we don't have one. As Beverly points out...

... it was the absence of just such a plan which allowed our financial situation to stay under the radar of most of the taxpayers until it reached a crisis. Before the April town election, a forward budget strategy was touted to great fanfare. I wrote about it at the time, here and here.
For some reason the whole forward budgeting (i.e have a plan) concept has been dropped. Bev is absolutely correct in taking me and the rest of the Select Board to task on this. Thanks for the reminder, Bev. It is easy to get caught up in the workings of the town and lose sight of the big picture. I will pursue the issue of our multi year financial forecast with the Executive Director and Budget Director. I'll let you know here what comes of my inquiry.
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Select Board work session on Wed 11th

The Select Board will meet on Wednesday, June 11 at 5 PM in Room 301 of the Town Hall. The Personnel Board and Police Chief are on the agenda. The Chief may have an update negotiations with the police officer's union and that would be in executive session. The discussion with the Personnel Board ...

... will probably focus on changes to the Town's Personnel Bylaw.
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Finance Comittee member named

According to comments here and at Curt Brown's blog, Stephen Mitchell has been named by Town Meeting Moderator, Steve Sharek, to fill Stewart Washburn's seat on the Finance Committee. Congratulations or condolences, I'm not sure which is appropriate :) In any case, thank you for your willingness to serve! The Finance Committee fills an ...

... important role and I look forward to working with you.
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Thank you, Stewart

Stewart Washburn has asked not to be reappointed to the Finance Committee following a long tenure on that body (18 years, I believe). Thank you for your long service to the Town, Mr Washburn. The Town Meeting Moderator has selected a replacement for Mr Washburn but I don't know yet who has been selected. Mr Washburn and other members of the Finance Committee spent many long hours ...

...every year meeting with the town department heads and going over budgets, considering Town Meeting articles, and administering the Reserve Fund. It is a time consuming and difficult job and we owe them all a debt of gratitude. Mr Washburn also served on the Capital Improvement Planning committee and Community Preservation Act community as Finance Committee representative. Once again, thank you. I don't know how you'll spend all that free time!
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Select Board agenda June 2nd

The agenda for the Select Board meeting tomorrow
6:30PM, Town Hall, John Marland Meeting Room

Appointments
Hearing NStar petition for two pole locations on Faunce Corner Road

Meeting with Ms. Mary Ellen DeFrias regrading UMass 4th of July Celebration

Update from Mr Hickox on DPW road and sewer projects

New Business
Petitions from NStar to obstruct and disturb the surface of various streets

Renewal application of James Alphonso for appointment as Constable

Approval of Minutes
Minutes of May 12, 2008

Minutes of May 14, 2008 workshop

Executive Session

Other news from Town Hall includes ...

... Mr Hickox has tendered his resignation from the Privatization Study Group. South Coast Rail will be seeking input from town boards and residents at a meeting on Wednesday June 18th at 10AM at Town Hall, Room 304 (Select Board meeting room) on economic development and land use plan. If you can't attend, written comments can be submitted to the Dartmouth Planning Office. Comcast will be moving the position of several cable channels in July as they transition to digital service. Some customers with analog service will need to get a digital converter box to see the channels. Comcast will offer it for free for 1 year. Details can be found at this link
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