Reconciling town budget is a marathon, not a sprint

Apr 11, 2019 by

Published April 11, 2019

By MAUREEN DOHERTY

NORTH READING— Now that the various town departments have wrapped up their presentations to the Select Board and Finance Committee on their budget needs and wants for FY20 over a series of weeks, the real hard work begins – determining what the town can afford to fund.

This year, the department heads were asked to be realistic in assessing their true needs as opposed to being limited to designing budgets more closely aligned to level services or modest increases since this type of budgeting often puts these departments farther behind in achieving their goals over the course of many years. For example, they may fall behind in road repairs and building maintenance or not be adequately prepared for the town’s changing (read aging) demographics.

Churning in the background on the administrative end has been a reboot to the formula used to split the town’s available revenues between town services and the school department is calculated.

They’ve been working on the “revenue and expense plan” for several months and this planning went into overdrive last week when they met the entire day last Monday, April 1 heading into what was a nearly six hour Select Board meeting.

The preliminary result of all that number crunching was presented to the board Monday night, giving them numerous scenarios to consider to close the gap. Members of the Financial Planning Team (FPT) were back at it throughout last week and the numbers are bound to change numerous times prior to their next meeting on April 22.

Once this is ironed out Town Administrator Michael Gilleberto will be in a better position to offer his recommendations on the department-level budgets to the Select Board members, and then the board members will have some hard decisions to make.

“We had a very busy week last week relative to the revenue and expense plan. You saw a component of the discussion on Monday night that showed where we were in terms of the overall plan,” Gilleberto told the Transcript. “We had quite a bit of back and forth with the Financial Planning Team last week… and we’ll have significant updates to offer at the next meeting, April 22.”

Gilleberto added, “The information was correct when looking at it from a component of a modified level services budget — the $1.3M deficit was certainly correct although what was unresolved was how we would apportion that using some of the changes in the formula we have been working on for the past few months.”

While a $1.3M deficit is certainly significant, Gilleberto explained that once they “cut through everything and just look at level services budget requests it reduces the deficit significantly, to about $400,000, which is where we stood at the end of last week.”

All of which will be explained in detail either April 22 or at a future workshop style meeting, possibly April 29.

The Financial Planning Team consists of two members of the Select Board: Chairman Michael Prisco and Vice Chairwoman Kate Manupelli; two members of the Finance Committee: Chairwoman Abby Hurlbut and Ben Gamer; and two members of the School Committee: Chairwoman Janene Imbriano and Scott Buckley plus T.A. Gilleberto, Finance Director Liz Rourke, Superintendent Jon Bernard and Director of Finance and Operations Michael Connelly.

Gilleberto explained, “We put in multiple months to refine the way we allocated different costs and different revenues with the goal being that some of the town-only expenses and some of the revenues intended to pay for town-only costs were being factored as a joint revenue.”

An example of such expenses falling into this category would be the town’s trash fee. “We were allocating that through the budget process, 66% to 34% between the schools and town respectively.”

Additionally, there are also “offsets” paid by the town’s various enterprise funds “to cover the administrative burden that they place on the Town Hall,” he said, such as when enterprise funds pay into the town’s General Fund “for services provided by General Fund employees. So that could be work that I provide for the Enterprise, or that the Finance Director provides. Those are considered to be ‘shared revenue’ in that a share of the money would go to the School Department’s budget under the way we (currently) allocate it.”

This is what they have been trying to fix, but he acknowledges that it must be done in a way so as to “‘hold harmless the School Department’ because you are basically taking away some of their revenue and causing them to have a lower overall number.”

The way to fix that imbalance is to “adjust the traditional 66/34 percent split,” he said. “So that is an exercise we have been doing. But at the same time we are also trying to apportion off costs associated with health insurance and other employee benefits, which are currently shared and considered as one group, and trying to apportion them between the town and the schools.”

“The percentages we had last Monday at the meeting were a surprise to some folks. And it took us a bit of effort at the Financial Planning Team to get all of it reconciling properly, and we did that last week, after the Select Board meeting. That should be reflected in the meeting on April 22.”

However, Gilleberto was cautious not to represent that “all is hunky dory with regard to the budget” but he does believe the town and schools are “back on the same page regarding what the number is.”

He said this change is not about taking money away from the schools.

“What I am trying to fix with this is, for example, we raised the trash fee (last year) because of the increasing cost of trash removal, but how do you tell a resident that all that money is not actually going to that cost? I’m trying to fix it to a point where every decision we make moving forward adjusts those fees to properly cover the cost they are associated with (and) actually results in a real benefit and the covering of those actual costs. That’s the goal,” he said.

The second piece of the puzzle is the “larger challenges” in the town’s budget compared with more recent years.

“There is a difficult conversation to have in relation to that too, but you can’t really do that until everyone accepts the starting point of what the numbers actually are. I think we are pointed in the right direction,” Gilleberto said.

Gilleberto explained that for discussion purposes, to the Select Board a modified level services budget “would reflect the series of new things that are in the departments’ requests that were reviewed at the hearings. For the School Department, it represents the middle ground between ‘level services’ and their NRPS 2021 plan implementation which calls for a number of new positions being added.”

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