By Tracy F. Seelye, Express editor
editor@whitmanhansonexpress.com
WHITMAN – The Select Board heard a proposal for a new formula with the goal of creating a process that is “transparent, clearly defined and easy to understand” – a process that is fair to both the Whitman-Hanson Regional School District and to town departments and must be responsive to current data.
The 5-percent rule that emerged from the Madden Report, while transparent, was not that easy to understand, according to board member Shawn Kain, adding that while it was something discussed with financial consultant John Madden, he never actually included it in the report and guidance on how it should be implemented by the town.
“What I had hoped would have led to cleaning up the budget process with the school department, actually, I think, clouded the issue and made things really difficult,” he said. “Having a stagnant 5 percent doesn’t seem to capture the complexities of our budgets.”
Kain said he intended for own formula should also be a starting point for discussion.
The first step is to project revenue.
“We’ve done this over the last couple of years and I think we’re getting better at doing it,” he said.
The second step to Kain’s formula is calculating a 2 ½ percent increase for all departments, including the schools. In what he termed “Step 3A,” if there is a surplus, additional revenue, recurring revenue excluding one-time funds above 2 ½ percent, “the amount allocated to WHRSD will be proportional to the percent of the general fund expenditures that is spent on education,” currently about 50 percent.
“To me this is the baseline to calculate what we can raise the 2 ½ percent over what we raised the year before,” he said. “This is based on recurring revenue, not based on one-time revenue, which was a little bit of a bone of contention this last year.”
In deficit years, the percentage of decreases would also be felt equally until the budget is balanced.
“By no means is it the end-all, be-all – it’s just a starting point,” Kain said, as he provided the budget update during the Tuesday, July 23 meeting, focusing on the school assessment formula and the system through which the town monitors financial trends.
“The two do complement each other,” he said.
Kain said he was an advocate for hiring Madden, whose recommendations the town has been using as the basis for budgeting decisions.
“The process opened up a lot of healthy dialog, and his recommendations have really helped [us] move in the right direction,” Kain said. “For that, we should be grateful, but this last budget cycle has surfaced a vulnerability in our financial policy, specifically with the school assessment.”
While Madden’s information was a good starting point for moving the town in the right direction, according to Kain, but a lack of clarity and specificity has hindered completion of the budget process.
“For this reason, I’m proposing that we develop a new formula,” he said.
That need not be very complex, he said, especially since officials need to clearly communicate the budget challenges to the people of Whitman, assuring voters that they are working to improve the budget process.
“We want the people to know there is integrity behind our decisions,” he said, adding he was sharing the information to gauge the board’s support for those efforts.
“Hopefully, this is the start of a healthy conversation that will lead to a meaningful solution,” he said.
Financial trend monitoring
Town Administrator Mary Beth Carter, Assistant Town Administrator Kathleen Keefe, Finance Chair Kathleen Ottina and Kain met with financial consultant Zachary Blake from the state Division of Local Services on Tuesday, July 9 as part of a Community Compact Best Practice Grant the town received to help with making improvements in that area.
Blake and his team will help the town implement a financial trend monitoring system and to develop a financial forecast.
“He already has lots of data from Whitman though the Department of Revenue, and we are planning on developing a usable report for the fall,” Kain said. “This report will be essential for us to strategically address the upcoming budget.”
The monitoring system is intended to monitor factors that identify the financial condition of a community, arranging them into a more rational order so they can be more easily analyzed and measured, he explained. The goal is to predict and prepare so the town is better able to prepare for fiscal distress in order to prevent fiscal crisis.
The town of Northborough uses the system.
Select Board member Justin Evans said Kain’s presentation represented a great first start.
“The 5 percent has not necessarily been the easiest to stick to either for the town or for the schools,” he said. “It was a number based on some work that John Madden did a couple of years ago, but it’s time to rethink it.”
He agreed completely with steps 1 and 3.
“Finding a way to divide new revenue is the right way to do it,” Evans said. “I’m a little concerned in Step 2, because whenever the Select Board talks about 2 ½ percent to the schools and when the Finance Committee about 2 ½ percent to the schools, it’s not necessarily the same as the School Committee talking about 2 ½ percent budget growth.”
He noted that a 2 ½ increase in the assessment to the schools allows them to increase their budget to grow between 1 and 1 ½ percent, while permitting 2 ½ percent budget growth for the district, it breaks it away from Prop 2 1/2.
“That immediately takes some of our new revenue every year, but I think it puts a more equitable start to that system,” he said. “General government can grow 2 ½ percent, School Department can grow 2 ½ percent, new revenue above those parts can be divided up somehow, but that probably does lock us in somewhere around a 5-ish – 4- to 5-percent assessment increase every year until the schools come out of hold-harmless.”
School Committee member Rosemary Connolly thanked Kain for his work and said the regional agreement gives away the town’s educational rights under Chapter 71 and that training new school committee members take had stressed that the article at town meeting which tried to separate the two budgets was not legal.
“They had just come down, hot off the presses, with what they said, so I’m concerned that this gives the impression that we actually have control of this,” she said. “There is a financial process that we’re supposed to do to insulate and that is come to the assessor first, and at my end on the School Committee have a good sense of where we’re going … early in the fall.”
She advocated asking how much something is going to cost before talking about what the town has to spend.
“We’re going to have a big jump in the vocational, but it isn’t an unusual cost, when you spread it out and say ‘what is everybody paying for it,’” she said. “We may have to look at what did we overpay to another community and how can we get that [$4.5 million] back and then move forward in some sort of trending more appropriately.”
Kain said he does not want to send the message that Whitman is trying to develop a formula to coerce Hanson into a budget formula rather he was striving for a formula they could agree on.
“What I’d like to do is develop a budget formula that we can agree upon early in the budget process so that, when it comes time to actually compute the budget, we’re all on the same page,” he said. “I believe we are partners.”
Ottina said Kain has kept her informed and up-to-date on the proposal.
“Having this discussion in July is a lot better than having it in April,” she said.
School Committee member Dawn Byers, also of Whitman, asked if the Superintendent of Schools or School Committee was aware of the meeting, noting she had attended because she noted a budget presentation on the agenda.
“I’d be remiss if I didn’t say I’m disappointed that the agenda itself wasn’t more clear that, in fact, you’re talking about the school assessment,” she said.
She agreed with Ottina that this is a good time to be discussing next year’s budget, but noted Northborough’s budget may be different to W-H school deficit may be much different than it appears based on the budgeting formula.