What's going on in Wisconsin?

I believe that the current system in our Commonwealth for public employee pensions and health care needs reform. We need to move public employees to a defined contribution plan (e.g. 401k Plans) rather than defined benefit plans, such as pensions. Even so, I would negotiate these changes with the collective bargaining units.
That said, Wisconsin governor Scott Walker is way off the reservation with his attempt to essentially de-certify public employee unions. Wisconsin state Representative Mark Pocan has a blog where he gives his assessment of the current budget brouhaha in that state. His take, Walker has made this crisis up out of whole cloth.
The Standard Times ran this story last week about New Bedford's unfunded pension and health care liabilities of some $480 million ...

... and Dartmouth faces a similar, albeit, smaller problem($50 million). The Select Board recognizes the issue and had proposed a Town Meeting article last fall to start paying down the liability. It was a drop in the bucket but a lack of a quorum prevented even that from being appropriated. It will be brought up again at the Spring town Meeting.
I am sure to get comments on the incentive for the public bargaining units to accept the change. First, they will have to face having fewer town employees as funds are diverted to pay our obligations unless changes occur. Second, they live here too. They want the town to prosper and have adequate services, just like you and me.
What are your thoughts on any of this stuff? Tell us on comments.
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Krugman on federal deficit talks

Professor Krugman says,

The bottom line, then, is that while the budget is all over the news, we’re not having a real debate; it’s all sound, fury, and posturing, telling us a lot about the cynicism of politicians but signifying nothing in terms of actual deficit reduction. And we shouldn’t indulge those politicians by pretending otherwise.

Read the whole column here
Ever wonder how a surplus as Clinton left office, turned into a deficit?Well,we gave the money away to the wealthiest Americans in tax cuts and are continuing to do so. Now we are going to cut funding for food to children and women and for heat for elderly and low income people so that the wealthy can keep their tax cuts. And as I said here, health care reform is the way to reduce deficits. It seems a Nobel Laureate economist agrees with that assessment. Click here to read on!

Governor addresses health insurance costs

The Patrick administration has introduced a bill aiming to rein in skyrocketing health insurance costs. David at Blue Mass Group has this post about the bill, sent to the General Court. This is the next step required in providing universal coverage. Romneycare was the first step, cover everyone, and that has largely been accomplished. Now with everyone in the system, the challenge is to restrain the growth of costs so that the programs are sustainable. Massachusetts continues to lead the way on dealing with health care reform.
The corporate media and corporate Congress have established a narrative where Social Security and medical insurance programs (Medicare and Medicaid) are lumped together when talking about deficits. The truth of the matter is ...
...Social Security is not a major driver of future deficits. Rather the exploding costs of health care insurance are driving deficits. Read what Noble Laureate and Princeton professor Paul Krugman has to say about that at this link and this one.
If you acknowledge that medical insurance costs are a major driver of deficit spending, then the Republican opposition to health care reform makes no sense. Reducing the growth of health care costs are the only chance of returning to fiscal balance unless we are going to allow the elderly and poor to go without treatment.
The national health care reform law mirrors the Commonwealth's approach in many aspects. Steps such as proposed by Governor Patrick are the logical next step and will be needed to keep the Commonwealth and country solvent. Unfortumnately we can not have a discussion based upon the realities in our media and Congress. It is to the detriment of us all. Click here to read on!

State House leaders will talk budget in Fall River

The Fall River Herald News reports that Senator Rodrigues of Westport will host a budget talk on Wednesday, March 2nd. This article has the details. Municipal leaders and the public are encouraged to attend.
See you there. Click here to read on!

No chalkboard, just straight talk.

Bob Neer over at Blue Mass Group posted this interview with Columbia University professor, Jeffrey Sachs. The link takes you to his post, click on the link he provides to watch the 8 minute interview.
I think Professor Sachs is spot on in his remarks.
As Bob points out, the two newsreaders can't wrap their heads ...

... around his forthright exposition of the truth. It doesn't fit their narrative. I am sure Sachs won't be invited back. Click here to read on!

Capital vs.operating expense, parte deux

I opened an email from Select Board member Ms. Stone today and found it included a statement from Scholl Committee member, Mr. Jones. talking about the budgeting process, he said, in part,

While this process plays out we have also met with the Select Board and Finance Committee to discuss the upcoming year's budget, discuss ways to implement additional efficiencies and finally ratify a written financial policy that the entire town will use as a guideline going forward. I will use this newsletter to focus on the last item as I believe it contains some very important policy guidelines that I think should be understood.
The policy for capital expenditures is noteworthy because our school system has benefited greatly in recent years by advocating, along with others, a more comprehensive definition of what constitutes a capital expense. The policy states that a capital expense is one whose cost, in aggregate, exceeds $10,000, and whose life expectancy exceeds 5 years. Look up most any definition of a capital expense and you will see some variation on that theme. The town's definition is a fair one in my opinion (and mine as well- Lara Stone)
For the past two years the schools have made a successful case that both the new K-6 English Language Arts and K-5 Math programs are in fact a capital expense. Each of these programs cost in excess of $375,000. The programs in use prior to their replacement were in place for over 8 years. The replacement programs are expected to last at least as long. During the two years when we advocated to the Select Board and Finance Committee for the need for these programs the town, (including the schools) through considerable streamlining and efficiencies, was able to generate significant sums of year end so-called 'free cash'. (Free cash is that money that was budgeted but not spent by year's end. Typically the town does not 'overbudget' but in any budget of some +$70m, there will be some money left at the end of the
year. People retire unexpectedly, take a leave of absence and are not replaced etc.) We made a strong case that a portion of that free cash be used for the purchase of these two programs as capital expenses. The case was strong enough in fact that it received near universal approval from the Select Board the Finance Committee and both Town Meetings. Other town departments made cases for a portion of that free cash and were successful as well.
The schools have never sought to use this free cash to purchase simply 'text books'. In fact we agree that a simple series of grade level texts do not constitute a capital expense and should be purchased out of our yearly operating budget. However there is a significant difference between replacing a series of 9th grade science texts whose cost might be $8-10,000 for example and the purchase of a program whose scope encompasses texts, software, professional development training, and workbooks for an entire elementary school system of some 1,000 children. These programs are most successful when purchased as a whole so that each student's knowledge is built from year to year by a program that is designed from the start to be consecutive and continuous. To purchase one grade level every year as the operating budget allows would one, be much more expensive and two, be qualitatively inferior because entire grades of students would not get the benefit of the new program.
Why is this important now? Didn't the schools succeed the previous two years in getting Town Meeting to fund these purchases? Yes they did, however it has become clear after our recent joint meeting that at least one member of the Select Board feels the schools have overstepped their boundaries in asking for funding for capital expenses for what he feels are ordinary 'operating expenses'. The agreed upon definition of a capital expense matters not to some it seems. From my correspondence with the Select Board member in question it is clear that since the schools receive Required Minimum Net School Spending (RMNSS) we should be happy to sit quietly and not advocate for what we feel are legitimate needs within the system.
Just so you know, the RMNSS comes from a state derived formula whose results insure an 'ADEQUATE' operating budget for a school system-and that amount places us at #305 out of 328 school districts in terms of per pupil spending. I am not sure when anyone was satisfied with adequate. I am also not sure that you would be very happy with central administration or anyone of your school committee members if we thought RMNSS was where we stop advocating for education here in Dartmouth.
What I am sure of is that we are entitled to make our case just like any other department within town. We have made that case on at least these two items and are very grateful to the Town for their support of them. I do not take that support for granted and I do not expect that we will be successful every time we present a case to the various town bodies. It is no secret that with every year 'free cash' dwindles. As every department cuts and streamlines their operations it is only natural that less money will be available to spread to other departments to address their legitimate needs at year's end. There is no secret here and I understand that. I also understand that it is important for a continued working relationship to have mutual trust between all parties.
In my opinion having to look back and re-fight the same battles over and over again even in the face of an agreed upon written definition of a guiding policy frays that trust. Where does that leave us? I think overall the various boards and committees within Town have and continue to work well together. The very nature of school/town funding almost guarantees a certain amount of tension between the school and town, it is to be expected and I don't see that changing any time soon. Yet in spite of that I think the cooperation and mutual understanding between both 'sides' has resulted in a markedly improved school system.
In three year's time the town has seen fit to assist the schools in starting a tuition-free full day kindergarten program, fund the purchase of the above mentioned ELA and Math programs, and purchase a significant number of replacement computers throughout the school district. This commitment to the schools above RMNSS shows that we have sought ways to cooperate to the benefit of all.
What I hope this particular newsletter will accomplish is to let you know that we must be grateful for what we have been given but also know that we need to be cognizant of how funding works within town and that knowledge will allow us to continue to make successful arguments when necessary to protect our schools in the face of a very difficult economy.

Of course, I am the Select Board member with whom he takes exception. I wrote about the subject in this previous posting.
I would like to make ... ...a few points about Mr. Jones' remarks.
First, I have no quarrel with the definition of capital spending. It has been adopted and I agree with it. The area that he and I disagree is where the line is drawn between one time capital funds, which in Dartmouth mainly come from unspent appropriations called free cash, and on-going expenses which are needed to fund operations. I would classify educational materials or police cars as ongoing operating expenses. While both meet the criteria for capital expenditure, we cannot run our schools or our police department without educational materials or vehicles respectively. I think as a matter of good policy, expenses needed for on-going operations must come from recurring revenue. Capital funds are not recurring revenue and therefore should not be used. That is exactly the policy which we have adopted, no one time revenue to support operations. Therefore I have opposed using capital funds for educational materials, and also police cars, and I will continue to do so. I simply think it is bad policy.
My question to Mr. Jones, and for you readers to consider, is this, 'What will the school department do to get current educational materials if there is not enough one time revenue to purchase them?' It seems that we should plan for such an eventuality as it seems likely to occur. I am certainly not asking to rehash any old arguments about what constitutes a capital expense. I am asserting that our adopted policy is that one time revenue should not be used to support on going operations and purchasing educational materials with one time revenue goes against that policy.
Consider for a moment that prior to the last couple of years, these materials were purchased from within the school department budget. How was this done? One possible way would be to plan for the expenditure in advance. Unlike all the other town departments, which must return any unspent appropriation to the town's General Fund at the end of a fiscal year, (this is how the free cash is generated) the school department is allowed to retain a percentage of their budget and carry it forward to a new fiscal year. In this way, large purchases can be funded by saving up a reserve to fund them over several years. Most school departments handle the purchase of large textbook series in this fashion. I think it would be a better fiscal policy to plan for replacement of educational materials in that way, rather than rely on the possibility that sufficient one time cash will be available. This is the crux of the disagreement.
Mr. Jones makes mention of Required Minimum Net School Spending (RMNSS). Some continue to insist that Dartmouth finds the school department at this level when, in fact, the town's appropriation is hundreds of thousands more than the RMNSS level. The school appropriation amount(while more than RMNSS) does not take into account the $1.5 million that the town appropriated for educational materials and technology over the past several years, the $300,000 a year for full day kindergarten, the $130,000 per year appropriated so the school committee would reduce or eliminate fees for activities and transportation. I am happy that the town has been able to provide these funds. Nonetheless, we continue to hear that the schools are not getting more than RMNSS funding. Not true.
Finally, the way in which school funding is assessed to the towns by the state has the effect of shifting the expenditures from all other town departments to the school department. That is the current state of affairs. The school department is not to blame for the formula, but they benefit from it and result has real consequences for operating the town. For instance, the town committed $300,000 from a new sales tax surcharge on meals and hotels to fund full day kindergarten. That amounts to about 1/2 of the revenue generated by the tax. However, if you follow school funding formula closely, you find the other half was automatically given to the school department due to the increase in local receipts applied within by the formula. So while the town appropriated half to the schools, the state required the rest to be appropriated in the funding formula. Net result, the entire meals and hotel tax revenue goes to the school department which leaves no increase at all for the other town departments.
Now some seem to think that I have bad feelings toward the school department. That is not the case. However, the school department is just one of several town departments providing services to the populace. I hope to balance the needs of all departments in order to continue to provide the services that residents expect. One way to do so is to insist upon sound fiscal policy. Click here to read on!

DHCD pans Lincoln Park plan

The Department of Housing and Community Development(DHCD) has informed the developers for the Lincoln Park parcel that the plan to locate 57 single family market rate homes on the site does not pass muster with the 40R Smart Growth statute or the town's bylaw. They have not approved the plan. The developers and town are left to come up with a new plan that meets the criteria. The DHCD makes some suggestions for resolving the conflict in their letter which I will post here when I have a chance.
Any development on this site will require a substantial investment for infrastructure before any housing can be built. That may be the sticking point from the developer's standpoint at this time.
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Finance Committee agenda for 2/17

From Chair ML Nunes

6:30 p.m. Pledge

6:31 p.m. Estimate Receipt Discussion – Gregory Barnes
7:00 p.m. Mr. Michael Shea, Greater New Bedford Regional Vocational Superintendent Discussion of proposal for $15 million addition, impact on Dartmouth Finances
7:30 p.m. Consolidation Discussion
7:50 p.m. Schedule A review, budget planning, etc.
8:10 p.m. Approval of Minutes from February 3, 2011 and February 7, 2011
Update on web posting of minutes
8:15 p.m. RFT (if any)
8:20 p.m. Any other business not known 48 hours prior to meeting.
8:30 p.m. Adjourn

This is an unofficial agenda. Official agendas might be found on the Town Website. Click here to read on!

Please shovel your sidewalk

The Standard Times has this article about the intention of the town to begin enforcement of the ordinance requiring home owners to clear snow and ice from the sidewalk in front of their home.
No one really wants to fine anyone. Just clear your walk after a storm. If your neighbor needs help, clear their walk too. Good karma, bro. Click here to read on!

One time revenue and operating budgets

I have been having an email converstion about a comment I wrote on this post. The issue arises from a sentence in that comment which was mostly about the declining amount of free cash available,
That sentence is,

There are also several disturbing trends, one being the reliance by the school department on one time revenues to update their teaching materials. What happens when that money is not available?

I am being taken to task for not raising this as an issue during the joint meeting on Monday with the Select Board, School Committee and Finance Committee.
To which I replied,

My position on buying educational materials with capital money is not that you cannot make a case for calling it a capital expense. A majority have decided that is the case and I accept that decision. Rather I think that using one time revenue, i.e. capital money, for a operational and continuing need, such as educational materials, is bad policy. I have been consistent in that belief and raised the issue throughout the meetings you mentioned. Have no misconception, I am glad that the town was able to provide the funds to purchase the materials as they are important to the current education of children. However, it is also apparent to me that the school department now hopes to have a continuing recourse to capital funds to renew the educational materials that are required to run the district. I think that is a dicey proposition and has not been settled as a matter of policy. Perhaps you disagree it is not settled policy since the town has made the recent purchases. Nonetheless, it is quite likely these funds will not be available and my question is, what then? How will the school department update their educational materials in that instance?
Due to budgetary constraints, the town has deferred maintenance and needed upgrades to much of our infrastructure and is also facing costly retirement benefit needs which must be addressed in order to maintain our roads, bridges, and buildings and ensure the town's fiscal health. Those needs are going to be in competition for the very funding which the school department seem to be counting on for the ongoing operation of the schools. That is the issue I have raised ...

.

... and I believe it to be a valid one.
During the meeting on Monday, I voted to accept the financial policies that were presented. I have no philosophical opposition to any of those policies but I do have reservations on some specifics. There is no mention in those financial policies of using one time capital money to fund on going operations. In fact, the opposite is true, the policy prohibits such use. While the school department is free to continue to ask for and may receive funds from one time capital money to buy educational materials, I continue to believe that to be poor public policy and will continue to advocate against such use. I believe my position to be consistent philosophically with the policies adopted.

I was not able to win over my correspondent to my position on the expenditures.
What do you think about this practice? Tell us in comments.

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