WHITMAN – The Select Board on Tuesday, Nov. 12, heard updates on the school assessment and town budget from board member Shawn Kain, who sought feedback on his proposal to use a portion of the meals tax revenue to help fund that assessment.
“I don’t think it’’s the ideal situation, obviously, but the hold-harmless situation makes things less ideal,” Kain said. “It’s a better situation and more predictable and controlled. That is where I’m leaning.
The town’s budget projections – and formal budget process – begin in December.
“It’s important to emphasize that the School Committee has the authority to set the assessment, I don’t want to send the wrong message about that,” Kain said at the meeting, which was attended by Superintendent of Schools Szymaniak, noting the board should work to improve communication and improve the budget process with the school district. “We should inform the committee about what we can afford and show them the details about that decision, so they can make an informed decision during the budget cycle.”
Transparency and directness are also important to foster budgetary cooperation, Kain said in his budget presentation.
Kain then presented his suggestion for a compromise.
“Don’t get me wrong,” he said. “I still believe in using the revenue-based formula so that, if the School District currently makes up 44 percent of the budget, then it seems fair that they should receive 44 percent of any new revenue.”
That would make it easier to compute and understand budget decisions. The bottom line is that, while fair, it still doesn’t give the district what it needs to maintain level services, which they would not support.
“We could dig our heels in and move forward in a negative way, or we can try to find a compromise,” he said. “So that’s what I’ve been working on.”
While the district remains in the hold-harmless situation, they need additional funds to retain level services, but the town also cannot afford to take funds from other departments in order to do that.
The town currently uses the local meals tax in a negative way, using it to contribute to the OPEB (other post-employment benefits) liability, instead of funding the operating budget.
OPEB liability is a key factor in the calculations of town’s financial rating, but, while being careful, Kain suggested something the town can do is use the revenue formula to calculate what Whitman can afford to pay the district. While the district is still in the hold-harmless Whitman should designate the meals tax as an additional revenue source for them.
“The OPEB liability, in turn, would go into the queue with the capital items and such, to be funded by free cash,” he said. “We would likely make the argument that the OPEB contribution should be at the top of the list, but, ultimately, the decision will be up to Town Meeting.”
Last year’s school assessment increased by 5 percent, with the meals tax revenue bringing in about 6 percent. He asked for the board’s feedback on his proposal.
Board member Justin Evans expressed concern over deviating on the meals tax/OPEB payment arrangement.
“My thought had always been, once we fully fund our pension obligations to Plymouth County, maybe we can kick some of that effort over to the OPEB liabilities, thinking that even half of what we contribute in a year would be huge burden off of us, and that might be a time to consider breaking away from our pattern of $140,000 a year of the meals tax to OPEB,” he said. “Before that, it risks getting to the point where, maybe Town Meeting doesn’t go for it, and it risks our bond rating.”
He said there is still a place to enter the conversation, looking at the proportional Chapter 70 that would have gone to either town had Whitman and Hanson not become a region and consider that such revenue would probably mean 65 percent-range of what revenue would go to the district.
“I like where you’re going, I just don’t like that approach,” he said.
“It’s definitely something I’m not thrilled about,” Kain said, noting he had discussed it with Town Administrator Mary Beth Carter. “It kind of hurts, it’s part of the compromise that I think we’re making.”
He said he agreed the town’s financial rating should not be risked
“Shawn and I have been very honest in both sides of this,” Carter said. “I understand that this would be until [the schools] were out of hold-harmless.” But she referred to a recent phone call with rating services, who were “thrilled” with seeing the town make a dedicated source of funds to secure a solid bond rating.
“I would not want to see that $140,000 not going in,” she said, indicating she would want to reach out and get more information about whether free cash would be an accepted source of funds.
“I do worry about our Moody’s ratings,” she said. “Yet I understand that we’re looking at anything and everything for a creative way [to meet the financial obligations]. It’s if we knew, for sure that free cash could go to this and replace the funding source.”
The Plymouth County liability had been scheduled to be paid by 2029, but was pushed out another year, she said in response to a question from Vice Chair Dan Salvucci.
“They may be looking to push it out another year,” Carter said. “We though we saw light at the end of the tunnel, but, already, that has changed … it’s not freeing up as fast as we thought it was.”
Salvucci said he looks at free cash as one-time money.
“You never know how much free cash you’re going to have,” he said.
Carter had indicated an initial wish to boost Plymouth County payments as the revenue from the meals tax began to rise, but it was decided that, at $140,000, the town is at least getting the difference.
Salvucci urged using that revenue for capital costs instead of the assessment.
“The alternative is we go into Town Meeting or the budget process at odds,” Kain said. “This is just a way for us to compute what we can afford early in the budget season and communicate that openly to the school district and the School Committee so they can make a more informed decision.”