Why delay the override question?

There seems to be widespread agreement that the only way for Andover to continue to afford the servcies that it provides today is to approve an override of Proposition 2 1/2, to allow more propoerty tax revenue to be collected. The three boards (Selectmen, School Committee, and Finance Committee) submitted an override question into the warrant for the upcoming Town Meeting, and the Selectmen recently approved it's insertion into the final warrant.
Then this week, still facing a large budget deficit, the School Committee decided to recommend that voters at Town Meeting vote against the override. In a similar vein, Bill Pennington has indicated that he will request voters approve withdrawl of his private warrant article requesting an override, and in a recent letter Pennington claims that an override "... is not a viable option this year".
So if an override is really needed, then why isn't this year the right year for voters to address the issue?
Another letter in last week's Townsman states:

"How can the citizens make an intelligent decision on a tax override that is
thrown out to them 30 days prior to the Town Meeting — or is it just a political
tactic? It has been obvious for a long time that Andover needs to increase its
revenue base."

It seems to me that this statement is self-contradictory. If indeed it has been so obvious for so long, then why can't Andover voters make an intelligent decision about an override this year?
I actually believe that the Andover voters are quite competent at making decisions on complex issues that affect their town and their lives. At Town Meeting on April 30, they will be asked to vote on the specific budget amounts for each department, as well as an extensive array of financial and legal articles. In contrast, a Proposition 2 1/2 override question seems really quite simple, and well within the ability of voters to descern their best interests.
It appears to me that those who think an override shouldn't be addressed this year are concerned because they have not seen sufficient buy-in across the town to insure that the override would be passed. This is an understandable concern from that perspective, but one that flies in the face of an open decision-making process.
Several proponents of increased spending on operating budgets have agrued that the Town should use 'reserves' to meet the shortfall in this year's operating budget, and "try again" to get adequate support for an override next year. This approach seems disrespectful of the votes that might be cast on the override question this year, as if to suggest that people voting against an override are simply "not yet prepared" to make such a decision, and need more time to be convinced. Perhaps if an override concern were a sudden recent issue, then this position might be defensible. Since in fact the issue has been a topic of broad town discussion for several years, this argument sounds to me more like a short-sighted tactic to mollify the conscience of people who want more money to spend this year, but realize deep inside that the town can't afford it with passing the override.

The Phillps money - what to do with it?

When Bill Pennington met with the Board of Selectmen and Finance Committee on Wednesday, he said that he intended to withdraw his private article for a Proposition 2 1/2 override at Town Meeting, but that the article regarding a transfer of the Phillips Academy contribution fund to operating budgets might still be an option for the voters to consider. Vikki Gallagher expressed a similar sentiment in her letter to the Townsman yesterday.
It's easy to understand why some might look at the roughly $1M in this fund and consider it a 'quick fix' to some of our budget deficit problems for FY09. In reality, using that money to fund operations budgets really would be a quick "fix", helping get the town more addicted to a drug that we seem to like the taste of. Each year in recent history we have taken money from our "reserves" - money that has no recurring source of renewal, similar to our personal savings account (or credit card), and spend it on stuff we gotta have. The more fixes we take of this drug, the more we get hooked, and the more we focus on how to get our next fix, without taking responsibility for how we're going to cope financially with our nasty habit.
Andover's financial problem isn't really the $2M+ dollar gap between recommend department budgets and the available revenue that we face this year. The problem is that we have, for several years, chosen at Town Meeting to authorize more expenditures than we can truly afford. The gap last year was several hundred thousand dollars, and we collectively gasped as we said "okay, just one last time." Now the gap is a couple million, and the best estimate we can make today indicates that the gap will be over FOUR MILLION dollars next year.
Each time we take reserves to fund our operational budget, it increases the gap between "level services" and "available revenues" the following year. If the residents of the town vote to sustain the growth of the operational budget, they should take the responsible path and approve a Proposition 2 1/2 override. Eroding our dwindling reserves will only sustain our habit for very short time, and then we'll face a staggering deficit with nothing to fall back on.
The Board of Selectmen and Finance Committee both passed motions Wednesday to recommend that Town Meeting approve the transfer of the Phillips Academy fund into the Stabilization Fund. It's the sensible choice.

Slushy cash?

John Zipeto's letter to the Townsman claims that the Free Cash account is really a town "slush fund". He exposes the fact that "It has been financed annually by a systematic over-budgeting of certain town departments. It has been going on for years."
Wow. This finally explains why 'certain' town departments are just rolling in cash each year...
John is quite correct that the town tries to budget conservatively for projected expenses. After all, if a department claims that it costs "X" to get a job done, then runs out of money before they've accomplished the task, then the voters would be justifiably disappointed. At the end of the year, if the department finished the year without expending the money that was budgeted, the excess is "returned" to the Free Cash account.
Note that Town departments cannot move money around between accounts at will, so if a sum is budgetted for, say Printing expenses, and they find a more economical way to get the material published than planned, the excess money cannot be shifted to some other use, such as staff salaries or new computers. The excess money gets returned to Free Cash at the end of the year.
John is correct that there is a secret plot within town management to squirrel money away into Free Cash. It says so in the Town Manager's budget document, on page 192 (great place for secrets - who would look there?!). Why would the town management ever do such a thing? It's a conspiracy with financial rating services like Moody's, who tempt towns into such devious practices by offering them higher bond ratings when they do so.
John is also quite correct when he says that the proceeds of this heinous process would go along way towards eliminating the funding gap in FY09. In fact, the Town Manager's budget recommends using $1,680,000 of this slush fund to do just that in FY09. In fact, the town has been using Free Cash to support the operating budget for years, which is one reason that the account is critically low today, and probably heading lower next year.
The tricky part about this slush fund, though, is the fact that Town Meeting actually has to vote on every appropriation of funds out of that account. It's really a crazy idea for a pot of money that's supposed to be hush-hush. That's why every year the Finance Committee publishes a lengthy description of the Free Cash acount in the core section of the budget article material (page 27 last year), describing the purpose, history, significance and a detailed accouting of balances and appropriations from Free Cash over the prior 10 years.
And I agree again with John that the Finance Committee and Board of Selectmen should (continue) to express shock and dismay over the abuse of Free Cash by the systematic over-spending on operating budgets that cannot be paid for with available revenues.

Kudos to engaged residents

This year I have been very gratified to see so many residents going to the effort of attending the public budget review meetings for Andover. I'm sure that there are more who watch from home, but it's certainly a clear expression of interest and engagement for someone to come down to Town Hall and sit around for several hours, a couple times a week.

It's probably reckless for me to start naming people who I've noticed attending frequently, because I'm bound to offend someone by not including them. Apologies in advance.

Mary Carbone, of course, has a very long history of active attendence at town meetings. I was concerned last Fall because I hadn't seen her for a while, but fortunately she has more recently resumed her regular attendence and participation.

Over the past two years, I doubt that any 'unofficial' resident has attended more Selectmen or Finance Committee meetings than Tom Deso. In addition to the time he spends serving on other volunteer committees, Tom shows up to most board meetings as regularly as any of the board members, and has become the voice of reason that these boards frequently turn to for input. At the Joint Meeting of the Selectmen and Finance Committee last night, Tom made a simple and clear observation that swiftly concluded a 20 minute rambling discussion about tax foreclosure property sales, that could well have consumed the Board for another hour had Tom not spoken up. He is a valued contributor to the leadership of the town.

I have been particularly pleased to see John Pasquale attending the recent CIP and budget article review meetings. John has been an outspoken advocate of reason at Town Meeting for several years, and has particpated in several Selectmen meetings in the past. His engagement with the review of capital projects and warrant articles this year has been constructive and welcome. It would be great if more residents could ask their questions and make their concerns known during the review period leading up to Town Meeting, so that they could have more input to the recommendations that are put forward at the Meeting, and better informed when the time comes to vote. John sets a fine example in this regard.

Of course, the candidates for Selectmen and School Committee positions have been fairly regular in attending the budget review meetings for the past few months. They have my respect for being interested enough in the operation of the town to put themselves into the election process, and to be willing to make the commitment of time and energy that their potential roles will demand.

There are plenty of other people who have shown up to enough meetings in recent memory that I should give them mention as well. John Zipeto, Diane Costagliola, Peggy Kruse, and Bill Pennington come to mind, just to name a few more. For any other residents who feel interested and engaged in the process of making Andover 'work' - thanks!

The problem with hard decisions

The problem with hard decisions is... well, they're hard.
It's easy to say that elected officials and professional staff administrators should buck up and make the hard decisions that town needs made, and I would certainly agree that these folks have a responsibility to work diligently on resolving the tough budget issues that the town faces today.
But I would also remind residents of Andover that we have the priviledge of an Open Town Meeting government, and that the residents bear a significant responsibility as the legislative body of the town. Leaders indeed need to lead, but voters ultimately make the tough decisions about whether or not the leaders are headed in the direction the town is willing to follow.
To some people, it seems that there are "common sense" solutions to the budget problems that the town faces, and that "town priorities" can be a guidepost for resolving these choices. If only it could be so easy.
Andover is a town of many people, with diverse backgrounds, ages, financial circumstances, and ultimately, priorities. To speak of "town priorities" is to beg the question - what really are the priorities of the town? Each department of the town government has a mission statement and associated goals. The school department has a well-articulated 'vision' published in the budget document, and the Vision 21 study several years ago attempted to craft a town-wide statement of shared values and priorities. In addition, each elected official may have their individual priorities, or those they feel are important to some particular constituency.
I believe that there is much to be gained by having our town leaders spend much more time (outside of budget season) meeting together to deliberate these various 'visions', and to attempt to forge a common strategy for pursuit of an integrated view of where the town is trying to be in the future, from both a services and a financial standpoint.
Common sense doesn't always solve our problems either... When faced with state and federal unfunded mandates that place crushing financial burdens on the town, with essential expenses such as health care rising 10-15% per year, with a strongly unionized labor force, and with budget authority split between multiple elected bodies, the management of the town must often face choices between alternatives that make limited sense to many observers.
While Andover's leaders face some difficult negotiations and choices this year, the voters also hold responsibility for decisions that may have significant and long-lasting impact on the town. Those who criticize their elected leaders for failing to make the necessary decisions should give some though to their own accountability for these decisions, and certainly should reflect on whether they, or someone else they know, might be capable of providing effective guidance through these tradeoffs. If so, then they have ample opportunity to contribute - immediately - to helping resolve those dilemas [Several residents decided to attend this morning's financial planning meeting, and were openly welcomed to literally 'sit at the table' and participate with the subcommittees as peers], and should be encouraged to run for office.

Morning thunder

The shouting began early on Thursday morning, before I was even half way through my Venti Vanilla (non-fat) Latte. The 7:30 am meeting of the three Long Range Financial Planning subcommittees was certainly energetic, with some frank discussion about the concerns regarding the structure of override proposals and the challenges in reaching multi-board agreement on how to move forward.
The discussion was sucessful at getting a lot of concerns and emotions aired, but the only issue resolved was the agenda for the next subcommittees meeting on Wednesday, 20 Feb at 5:30 pm. The group is attempting to get the analyst from Moody's to call in to the meeting, to give their advice on how to avoid any further slip in the town's bond rating. The group will also review the latest data on revenue and expense forecasts for FY09, and will likely discuss more concrete concepts for how to structure the override and associated contingent appropriations.
The issue here is to decide on (1) the dollar amount for the override question, (2) how & when the override revenues would be used if approved, and (3) whether to adjust the current allocation of 'available' (non override) revenues to reduce the impact on some departments in the event the override is not approved.
When the Town and School budgets were presented to the three boards on 4 Feb, members from each of the boards suggested that we need to consider some changes to the overall budget allocations, to avoid the severe impacts to the school education and athletics programs that have been identified. The Andover High School has a fantastic athletic program, and I doubt anyone in Andover would be content to let the program be eliminated. Several town-side departments have also identified significant strain and shortfalls required to fit within the available revenue budgets. I am particularly concerned with the budget impacts within the Police and Fire-Rescue departments, which have been operating on minimally-staffed shifts and have insuffucient expense budgets to properly maintain basic protective equipment for the employees. Override or not, these are areas I believe we need to be concerned about.

Budget sparring

Staff writer Brian Messenger is punching below the belt.
His front-page article in today's Andover Townsman (click here) paints a picture of our Town Manager as the budget-slashing Grinch in this year's budget process, but it's just not so.
At a Tri-Board meeting on 3 Dec 07, the Board of Selectmen, School Committe, and Finance Committee jointly developed and approved a plan for the budget formation process, including very specific guidance on how the available revenue was to be partioned across Town and School Departments. While the budget document is titled as the "Town Manager's Recommended Budget", the top-line allocation to each department was in fact directed by the Tri-Board policy.
The Manager and his Department Heads developed town-side budgets in compliance with the Tri-Board policy (based on available revenues), and was required by statute to call it his "recommended" budget. The School Department 'preliminary' budget was released on 18 January, and includes no acknowledgement of the Tri-Board policy and budget allocation, and indeeds exceeds the targeted budget by roughly $2.9 Million. With great reluctance, the School Department did present on Monday the impacts of complying with the budget allocations defined at the 3 Dec Tri-Board meeting.
The sparring over the allocation of available FY09 revenue dollars may just be starting, but School Committee member Tony James seems to have taken the gloves off already. After listening to the Town and School presentations, Mr. James summarized by claiming that the impact of the recommend allocation on Town Departments was "nothing", but that there was a "hugely significant and detrimental impact" on the School Department. (I'll comment more on that topic another day...)
The Town and School department budgets are being reviewed in detail over the coming weeks; schedules can be found (here) and (here). The three financial planning sub-committee will meet next on 14 Feb (7:30 am), where the topic of town/school allocation will mostly likely be a central topic.

Community Preservation Act

Andover will vote whether to approve the Community Preservation Act (CPA) or not at the Annual Town Election in March. Information about the CPA can be found at: andovercpa.org

What to leave in, what to leave out

The Town Manager released his Recommended Budget for FY09 last Friday, and will be presenting to a Tri-Board meeting on Monday evening. The 'theme' that he chose for this year's budget is "what to leave in, what to leave out." It seems a fitting theme for the budget discussions this year.
For those interested in watching the budget presentation (from both the Town Manager and the Superintendent of Schools), tune in to cable channel 22 on Monday evening at 7:00 pm.

Property values and tax rates

There seems to be a common misconception that a homeowner's property tax bill increases because their property valuation has increased. Not so!
Property tax bills will generally increase each year, even if the overall value of all property in town were to decrease.
The tax bill is determined largely by the Town budget, appropriated by voters at the Annual Town Meeting. A large portion of this budget is funded by property tax revenues. The total amount of taxes to be collected in a year (the tax "levy") is spread across the property owners in town based on the value of each property. A new "tax rate" is set each year, which determines the tax to be paid for each $1,000 of property value. This rate is calculated by dividing the total tax levy by the total value of property in town (with some adjustment to charge slightly different rates for residential and industrial properties). So if the tax levy goes up, the average tax bill must go up, regardless of how property values have changed year to year.
Historically in Andover the property values have increased faster than the tax levy, so the tax rate has generally gone down each year over the past decade. In FY1995, residential property owners paid $16.06 per thousand dollars of property value, but by FY2007 this rate had reduced to $11.25. The average property valuation more than doubled in that same time period ($227,300 to $591,800) so even though the tax rate decreased, the average tax bill increased 82% in that same period.
So don't get mad at your property assessment each year, thinking that it's the culprit causing your tax bill to rise! Unless your assessment has risen more rapidly than comparable properties in town, you will be paying approximately the same portion of the overall tax bill as you did in previous years. Of course, if you think your assessment is out of line with the valuation standards, your tax bill will be reduced if you sucessfully challenge the valuation get it decreased.

Want to post your own thoughts?

The goal for this blog is to stimulate thought and discussion within the Andover community, and allow residents to exchange their views.
Please feel free to response to existing posts with your comments, by clicking on the Comment link at the end of each post. Comments can be submitted anonynously, or you can include your name.
If you are interested in posting your own ideas and views on this blog, I would be happy to add you as an author! Just send me an email at:
mark@mwmerritt.org

Plugging the hole?

Governor Duval Patrick released his proposed FY09 budget last week, giving towns and cities a first glimpse at the levels of state aid they may be receiving next year.

The state aid to a town consists of roughly 17 distinct line items, many being earmarked for specific use within town (notably the Chapter 70 aid which is dedicated to the School Department budget). The various elements of the state aid package (and the charges, or 'assessments', which the town must pay back to the state) are detailed in the Cherry Sheet.

Largest 'general government' component of the state aid is the Lottery Aid - a portion of the state's lottery profits distributed to cities and towns to help fund their annual budgets. State Lottery revenues have been weak in recent years, so this important element of aid has been at risk. In Governor Patrick's statement regarding the budget, he notes:

We are protecting cities and towns from what would otherwise be an anticipated $124 million deficit in the State Lottery Fund, plugging this hole with license fees the state would receive from my proposal to create three destination resort-style casinos.

The Lottery Aid to Andover this year was $2.2 Million. The Governor's proposed budget would result in this same level of Lottery Aid for next year (which is the level assumed by the Long Range Financial Planning subcommittees in projecting the town budget deficit for next year). If the Governor's concepts for introducing gambling casinos is not approved (or is delayed) by the state legislature, then Andover's Lottery Aid will be reduced by approximately $295,000.

It seems that Andover would be prudent to plan on NOT receiving this $295K in Lottery Aid this year, despite the Governor's apparent confidence that his casino proposal will be successful...

Soapbox at Eagle Tribune

Click here to view site

The Eagle Tribune has a blog page for editors, called the "Soapbox". The link above shows the entries posted under the topic of "local politics", but you can easily navigate from there to the entire list of postings.

Why wait to settle contracts?

Andover teachers rallied last week to protest for a timely settlement of their contract negotiations. Selectmen Brian Major has suggested that it might be advantageous to delay contract settlements until after Town Meeting, while School Committee member Deb Silberstein strongly opposed this suggestion. Taylor Armerding recently posted his views about this debate on The Eagle Tribune 'Soapbox' (click here to see it) and I responded as follows:

I see some practical benefit to settling some of the larger bargaining unit contract negotiations prior to Town Meeting.
The financial tradeoffs and uncertainties that voters must consider are complex enough without adding further ambiguity from unsettled negotiations.

Andover voters indeed make the final decision about how much they will be taxed for the services they desire, but it has not been the town’s practice to ask voters to explicitly decide the level of salary increase that bargaining units should receive.

I suggest that the designated negotiation teams should strive to reach fair and equitable agreements, and that town voters should decide what services they are willing to pay for - having a clear and realistic understanding of what those services really cost.

Andover voters have a recent history of denying requests for operating budget overrides, yet approving appropriations for increasing numbers of staff. Even if barganing units were to agree to zero salary increase for the next three years, the current financial predictions indicate that there would be insufficient revenues to sustain the current number of employees and associated services without an override.

While salary increases can certainly have a significant impact on the magnitude of the current budget deficit, the contract negotiations are not the key financial issue facing Andover voters. The key issue is how much to increase revenues (through fees and property taxes) and/or decrease staff and services across all the departments of the town.

Coffee-shop talk

In an article in today's issue of The Eagle Tribune (click here to read the full article), Bill Pennington describes the need to provide town voters with the budget information they need to make good choices at the upcoming Town Meeting:

"My whole thing on this is, we've got to look at the options and get the information out to the citizens," Pennington said. "They have to understand the consequences of their actions. Until those options are laid out before them, this is coffee-shop talk."

I admire Bill's conviction and dedication to this effort, and share his sense of urgency to get information flowing to - and amongst - the concerned citizens regarding the strategic budget choices they will be called to make in late April.

In fact, Bill's comment sums up my motivation for creating this blog last week, and for trying to put in enough content to start to attract some interest.

While I agree that the budget planning officials (on the School Committee, Board of Selectmen, Finance Committee, Superintendent of Schools, and Town manager) should make every effort to disseminate the data, analysis, projections and conclusions they have been working so diligently to prepare, I also believe that the community needs to find ways to discuss and share their thoughts on the choices and tradeoffs they collectively face. While our elected leaders are charged with defining the issues and choices, and making their recommendations, the registered voters are ultimately responsible for deciding the financial paths that the town will elect to follow.

Andover Forum website

Click here to visit the website.

The Andover Forum website was created in 2003, in an effort to provide an online mechanism for residents to raise issues and conduct discussions on a variety of town issues. Despite the good effort put into the creation and launch of the Forum, it didn't get a great deal of use. The last post was in early 2004.

The forum can be read by anyone, but posts can only be made by registered users (registration merely requires having a library card).

Andover Finance - on Google Groups

Click here to access the group site.

I recently created a Google 'Group' for topics related to finance in Andover. This site allows visitors to begin and contribute to discussions on any financial topics of interest to them. It also has an area for storage of documents (such as Finance Committee meeting agendas and minutes) and pages of information about the financial operation of the town.

Related web sites and resources

As I encounter other web sites that might be relevant to people in Andover, I will post a description in the blog. Each of these posts will be tagged with the label "websites", so that readers can easily extract the complete listing of these posts.

Budget "drama"

The Eagle Tribune published an editorial in today's paper titled "Andover school budget needs analysis, not drama" (click here to view the editorial). The drama in question was played out last week at meetings of the School Committee (Tuesday) and the Long Range Financial Planning subcommittees (Thursday), where school leaders and parent advocates expressed considerable frustration at the apparent lack of support from other boards for a Proposition 2 1/2 override.

At issue here, I believe, is really a difference of opinion on how best to equip Andover voters with the information they need to make informed decisions about their choices for the FY2009 budget.

Some proponents of increased taxation (above the Proposition 2 1/2 limit) seem to feel that voters need to see unified advocacy from the full spectrum of town and school leadership, along with a town-wide fiscal plan that has an override "built in" as a fundamental assumption. Other proponents (and certainly some opponents) claim that voters need to have a detailed accounting of expense and revenue data, with different alternatives carefully modelled and analyzed in order to make wise choices.

Speaking for myself, I sense that a great many of the voters in Andover need both of these inputs to make their best decisions. As a voter in town, the judgements of elected officials and senior management are very important and valuable inputs to my decision process, but I also need the background information necessary to come to my own conclusions.

The town is facing quite serious choices this year, to decide how much to increase taxes and/or decrease services. The choices made will likely have long-term impacts on the operation and character of the town. Leaders should be actively communicating their views, and the detailed facts and projections that support them. Concerned residents should be asking their town and school leaders for this information, so that they can be responsible legislators for the future of their town.

FY09 Budget Process & Timetable

(This material is copied verbatim from a very informative page on the town's web site. It includes additional background on the Long Range Financial Planning subcommittees, and links to the budget analysis conducted by those groups last Summer and Fall)

At a tri-board meeting held on December 3rd, the Board of Selectmen, School Committee, and Finance Committee each agreed by formal vote on a process and timetable proposed by their Long Range Financial Planning sub-committees for developing budget balancing options for the Town of Andover’s FY2009 Budget, which will require some combination of cost savings, service/personnel cuts, an operating override, and fee increases.Specifically, the three boards:

1. Agreed on a $3 million target amount needed to balance the FY2009 budget through a combination of cost savings, service reductions and new revenues.
2. Agreed on the allocation of target amount reductions to departmental budgets based proportionately on FY2008 appropriations as a starting point, with the expectation that they will be adjusted later based on the severity of reductions for critical services.
3. Agreed on a target amount for a second round of departmental reductions equal to the FY2008 appropriations to provide opportunities for prioritization and tradeoffs.
4. Agreed on a timetable.
5. Agreed that the process will include fully exploring both override options and approaches to balancing the budget that includes a combination of overrides, fee increases and service cuts.
6. Clearly articulated what is expected from the Town Manager, Superintendent of Schools, and Department Heads.

Meeting reminder

The next meeting of the Andover Finance Committee will be held this coming Wednesday (16 Jan) at 7:00 pm in the 1st floor conference room (Community Development & Planning) in the Town Offices building.

The agenda includes the following topics:

• Appoval of minutes
• Transfer requests
• Sub-committe updates
• Discussion of Proposition 2 1/2 Override Options
• Finance Committee Report Warrant Article
• Budget Process / Meeting Schedule
• Other Business

Members of the public are also welcome and invited to attend and contribute!