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Raising the big 'O' word
'Near historic funding'
The manager also proposes helping the school-enrollment challenges in ways that "holds the potential to provide a near historic funding increase to the School Department." Details below.
You can read the whole statement here >> But note the items at the top:
The proposal totals $146,541,798, an increase of $4,177,173, or 2.9 percent from the current budget. If the amount contributed to the Override Stabilization Fund is excluded, the proposed budget is an increase of $4,876,713, or 3.5 percent, from the current budget.
Why exclude that amount? Doing so at the top of the statement shows how the override fund has improved the overall budget picture.
-- Funds from the $6.5 million 2011 override lasted three years (fiscal 2012 through '14), and no override was sought. No, operating override, that is. Current projections have extended the plan to cover through fiscal 2020.
-- Commitment to 2011 voters to caps on increases in town and school operating budgets at 3.5 percent per year are maintained as the town proposes a 2.95-percent increase. With continuing enrollment growth, an increase in school funding above 3.5 percent is proposed.
-- Other promises have been kept: They include commitment to voters for an added $600,000 for the School Department in fiscal 2012 and $400,000 each year in addition to the amount currently appropriated in the capital budget for road improvements.
-- In 2011, health-care cost increases were capped at 7 percent. If increases topped that, then town and school budget would be proportionately decreased by the excess amount. Among other things, any savings would be put into -- here's that phrase again -- the override stabilization fund.
-- Reserves in an amount equivalent to at least 5 percent of the budget have been maintained.
Behind override mentions
The manager's statement mentions a debt exclusion just one, and only in passing. The 2011 operating override gets a number of mentions.
"At the time the 2011 override was proposed," Chapdelaine wrote, "the Town was facing a projected deficit of $6 million. Also at that time, the Legislature was discussing giving municipalities more authority to control their health care plans and costs. Optimistically, it was assumed that some changes would be made to allow the Town to save $1 million. The proposed override was then set at $6.49 million, an amount that projected to maintain current service levels for three years."
About a month after the override passed, he wrote, the state approved a significant health-care reform law for municipalities that provided authority to design plans matching what the state provides to its employees and also authorized municipalities to join the state’s health-care plan.
Thus, he wrote, Arlington joined the Group Insurance Commission, which led to significant savings enabling the town to stretch its three-year plan to nine years.
"We are mindful of the strong desire of residents to maintain quality services and the sacrifices they have made by supporting the override," he wrote. "We are committed to pursue all appropriate productivity improvements and cost reduction measures in order to sustain these quality services."
A big thank you
That is a big thank you to residents. But the manager is from done regarding an override.
Beginning in the fall 2014, the Long Range Planning Committee held discussions focused on the future of town and School budgets and the amount by which they should grow on annually. Committee members, he wrote, wanted to explore strategies that could extend the life of the current long-range plan and head off the next operating override. Among the changed adopted:
-- Annual budget growth for town departments was set at 3.25 percent for fiscal 2016 and reduced to 3 percent for fiscal 2017 and beyond.
-- Annual budget growth for the general education portion of the School Department budget was maintained at 3.5 percent for fiscal 2016, reduced to 3.25 percent for fiscal 2017 and then reduced to 3 percent for FY2018 and beyond. (The School Committee has recently expressed frustration about these benchmarks.)
Last fall, the Long Range Planning Committee again discussed the future of town and school budgets. This discussion focused on the needs of the School Department and addressed the financial pressures caused by continued increases in enrollment, and further pressures from state-imposed performance mandates.
"In acknowledgement of these needs," he wrote, "but also remaining aware of the need to adhere to the principles outlined above, this budget recommendation proposes a significant funding increase for the School Department in FY2017."
In fiscal 2015, Long Range Planning acknowledged that unanticipated growth in school enrollment had prompted the need to provide a funding allowance in recognition of the added resources necessary to educate a growing student population. At that time, the committee moved to increase school funding on an annual basis via a formula that provided 25 percent of the prior year’s per pupil cost as determined by the state’s Department of Elementary and Secondary Education multiplied by enrollment growth as reported Oct. 1 each year. This resulted in additional increases of $885,150 and $530,069 in fiscal 2015 and 2016, respectively.
Last 2015, the School Department expressed concern that 25 percent of per pupil cost was not adequate to meet the needs of the district. In response to this concern, this budget proposes to increase the formula to represent 35 percent of per pupil cost, and for fiscal 2017 look back to the previous fiscal years that received 25 percent and bridge the gap between the funding amounts.
School budget help
This budget also recommends altering last year’s recommendation to reduce the rate at which general education costs can grow, and maintain the previously used growth rate of 3.5 percent. Based on this, the budget recommendation is as follows:
In addition to this significant increase, this budget recommendation further proposes that any increase in Chapter 70 aid above what is currently estimated ($126,000) be provided to the School Department. Standing alone, this budget recommendation provides a significant funding increase for the School Department, a 6.4-percent increase in an environment where property tax revenues are capped at an increase of 2.5 percent.
"With the addition of any not currently projected Chapter 70 aid," Chapdelaine wrote, "this recommendation holds the potential to provide a near historic funding increase to the School Department. Additionally, this proposal adds $2.8 million in new school funding from FY2017 to FY2021 as compared to last year’s Long Range Plan."
He concludes with a nod to the "o" word:
"The implementation of this approach, based on current enrollment projections, still allows the current override period to be maintained through FY2020. However, in FY2021, the Town’s structural deficit reemerges and is projected to be approximately $11.2 million. The Town’s structural deficit is discussed in greater detail on page 10 and the Town’s Long Range Plan can be viewed on page 13."
The manager’s preliminary budget message is the first step in the annual budget process that culminates at Town Meeting. As the budget process evolves and additional information becomes available over the next few months, the estimates and recommendations contained herein will be adjusted as required. Further detail will be made available in March via the Town Manager's Annual Budget and Financial Plan and in April with the issuance of the Finance Committee's Report to Town Meeting.
This viewpoint was published Wednesday, Jan. 20, 2016.
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