Changes called "long overdue"
A state report about the planned consolidation of town and school finances points to a number of shortcomings that need to be addressed while it recommends guidance for moving ahead with targeted completion of the process in mid-2014.
Steps include changing the treasurer and Board of Assessors from elected to appointed offices as well as moving the comptroller to Town Hall and increasing the automation and efficiency of financial processes.
Read the complete state report here >> (.PDF)
Two key conclusions
"Currently, the school budget analyst spends as many as three hours per day to complete these tasks using a manual system," the report says, referring to Janet Collins, who records staff absences and hiring of substitutes. "We don’t believe that these responsibilities represent the best use of time for the second highest paid and longest serving person in the school business office."
The state's proposed timeline see completion of a proposed merger by July 1, 2014. The Jan. 26 report from the Department of Revenue's Division of Local Services has at least two key conclusions:
-- "Many other Massachusetts communities have moved to a government structure that places financial management responsibility firmly with the town manager or administrator. Arlington has resisted the clear trend among Massachusetts communities, and particularly among comparably-sized communities with AAA bond ratings, to create a consolidated finance department with financial positions accountable to an administrator or finance director.
"Loyalty to and respect for long-serving officials in these offices may color local opinion, but in the harsh environment of revenue constraints and constant spending pressure, we believe that a coordinated and accountable financial management structure is long overdue in Arlington."
-- "On the school side, improvements to financial controls and reporting have been put into place by the chief financial officer [Diane Johnson] since the [$1.5 million] deficit in FY2010. However, resources and systems remain somewhat fragile and staff is stretched thin at times. Over time, tight budgets have caused resources to be focused on direct educational services at the expense of administrative capacity across the department.
"In part, lack of administrative capacity at the building/cost center level is cited as the reason the business office has not moved ahead with MASBO’s recommendations to decentralize processing of purchasing and payroll. Recently, communication between the school department and lead finance officials and committees on the town-side has been strained."
The reference is to recommendations made in an audit by the Massachusetts Association of Business Officials in the fall of 2010 following the discovery the previous August of a $1.5 million shortfall from the preceding fiscal year.
Other points in 38 pages
The report's 38 pages include these points:
-- TOWN OVERSIGHT: The town’s finance offices perform their functions well in most respects, but "they operate without direct oversight to ensure coordinated and efficient operations across departments.
"Staffing levels appeared uneven across departments and we found some procedures were manual or labor intensive. Given the complexity of municipal finance today and the ongoing budgetary pressures facing Arlington, we believe that the current organizational structure with independent finance officers is outdated and no longer sufficient to meet the town’s needs."
-- SCHOOL ADVANCES: After arriving in September 2009, the schools' CFO has revised the district’s chart of accounts, the third such change in recent years, to make them more compatible with state reporting requirements. She revamped the monthly reporting system for revenues and expenditures to reflect the new account structure and to include projections to year-end. She also has instituted a position-control system where all district positions, regardless of funding source, are listed and assigned a position number with projected salary costs for the year.
Even so, more work remains, on both sides.
In its 2011 report to Town Meeting, the Finance Committee supported a request to study putting in effect a town-school finance department. In doing so, the Fincom pointed to the "current fragmentation of financial management functions." The report also describes a budget process that suffers from "obscurity and complexity."
Before making its recommendations, the 2012 state report helps confirm last year's Fincom report with a series of observations. Among them:
UPSETTING OFFSETS: The town’s budget includes numerous "offsets" that effectively reduce appropriations in many line items. "These offsets typically represent costs that are funded by the town's enterprise funds," the report says. "The use of offsets in the budget is not consistent with current enterprise fund budgeting procedures and detracts from a transparent budget document where departments are fully funded."
Offsets were "likely a contributing factor in an error that occurred in the setting of the FY11 tax rate. The comptroller’s staff entered an incorrect offset figure for the skating rink which lowered the debt service appropriation and resulted in an appropriation deficit of $239,083."
NO CENTRAL SYSTEM: "Departmental budget requests are not prepared using the MUNIS [accounting system] budget module, but reside on various individual computers and are transmitted to the finance committee in different formats.... Complications arise in tracking budget changes as the deliberation process evolves and assumptions are adjusted."
TAX RATE SETTING "is handled almost exclusively by the elected assessors and comptroller, with no meaningful role for the town manager’s office. This creates a situation where the financial policies reflected on the tax rate recapitulation sheet may not coincide with the town’s initial financial plan developed by the manager and finance committee."
DUPLICATION OF EFFORT: "Financial information entered in the treasurer/collector’s office must be rekeyed in the comptroller’s office due to the lack of integrated software. While bridge programs could be developed to automate the transfer, this has not occurred."
EARLIER RISKY INVESTMENT: "The treasurer/collector’s office invested proceeds from property tax overrides that were set aside in a special purpose stabilization fund in risky investments at State Street Bank. During FY2009, these investments experienced a net loss of about $500,000 in principal, after the Attorney General’s office recovered about $230,000 from State Street for failing to fully disclose the risky nature of these investments."
$1.5M SCHOOL SHORTFALL: The issue "was set into motion by overly aggressive and flawed revenue estimates, depleted special revenue fund balances and a lack of control over salary expenditures."
OTHER PRACTICES include the school department initially charging all costs to the general-fund appropriation and making adjustments at year-end. The report says that "made it very difficult for the comptroller to detect school budget problems during the fiscal year. Procedures associated with the long-standing practice of encumbering the entire remaining balance in the school budget at year-end also compromised the town’s ability to detect deficits."
To address these and other issues, the state report makes 15 recommendations. Among them:
-- Amend Arlington's Town Manager Act to create a consolidated finance department where appointed finance officers report to a finance director or the deputy town manager.
-- Convert the elected treasurer/collector’s position -- now held by Stephen Gilligan -- to one appointed by the manager. The report calls this a "clear trend" in Massachusetts for reasons related to making sure that office holders possess the experience and qualifications needed.
-- Make the director of assessments job -- now held by John Speidel -- and the Board of Assessors appointees of the town manager. Such a director would receive direct, day-to-day supervision from the manager.
-- To preserve some independence, keep the comptroller -- a position now held by Ruth Lewis -- subject to appointment and removal by the selectmen. Have it report directly to and be evaluated by the finance director or deputy town manager. Consider placing the comptroller’s office in Town Hall, not in the basement of the high school, where it is now.
-- Explore using the MUNIS budget module for departmental budget submissions and as a central database to store and track changes during the process.
-- The town manager and school superintendent -- Adam Chapdelaine and Kathy Bodie, respectively -- should address outstanding issues with previous town-school consolidations, including job classifications, salaries and union representation in the merged IT department.
-- Purchase and put into effect an automated system for recording school staff absences and hiring of substitutes. Collins, the budget analyst, spends as many as three hours daily to complete these tasks using a manual system.
-- Install MUNIS terminals in each school building or cost center.
The town made the state report public Feb. 3, eight days after it was dates as released, and issued a news release with general information, available here >>
The consolidation will be discussed at Town Meeting, which begins Monday, April 23.
This story was first reported Friday, Feb. 3, 2012.
Overall, state aid for Arlington is expected to rise under Governor Patrick's proposed budget.
Chapter 70, the largest part of school aid, is to increase $1,222,363 -- to $8,102,943, from $6,880,580.
The subtotal for all education items is expected to rise $1,136,586 -- to $1,136,586, from $7,032,105, because of a decrease in charter tuitions reimbursements.
Brownsberger's report, comment
Governor Patrick's budget proposal have been posted to the Division of Local Services' website.
Find Arlington's proposaed share in this list >>
The governor's budget proposal recommends funding fiscal 2013 Chapter 70 at $4.136 billion or $145.3 million higher than fiscal 2012. The governor’s budget also recommends increasing funding for Veterans’ Benefits by $6.8 million, and funding most other cherry sheet accounts at the FY2012 level.
Local-aid estimates are preliminary and are subject to change as the legislative process unfolds.
This story was first reported Thursday, Jan. 26, 2012, and updated two days later.
Members of the Arlington Education Association (AEA) have been offered a 2-percent raise after the contract that ends in August and face paying higher health benefits, according to details they received Monday, May 16. Members voted on whether to accept the recommendation from their bargaining committee Thursday, May 19.
According to a union source, the new contract provides for:
-- A 2-percent raise, which takes effect on all AEA salaries next Aug. 31;
-- The contract is for two years, from 2009 to 2011, and the raise takes effect only on the last day of the contract and is not retroactive.
-- Health benefits will require union members to pay a larger share: 25 percent for Blue Cross Blue Shield (the town would pay 75 percent) and 20 percent for Harvard Pilgrim (the town would pay 80 percent). Under the current contract, the splits in paying for healthcare costs were 85 percent for the town 15 percent for AEA members for both Harvard and Blue Cross.
-- As of July 1, all new hires for 2011 will pay for healthcare according to the 75/25 split for all plans.
The current contract ends Aug. 31; it was for two years and ran from Aug. 31, 2009.
The source said joining the state's Group Insurance Commission (GIC) is not in the contract. That had been the stumbling block in two previous attempts to reach agreement -- last year and in November 2009.
As to the lack of a provision for the GIC in the tentative accord, a union source said that came about after Town Manager Brian Sullivan told the Public Employee Committee (PEC), composed of those bargaining for each union, to return with a proposal.
PEC reps came back with a proposal that did not include the GIC. The source said the manager's counterproposal involved a greater-percentage raise, but with contribution concessions on paying for Harvard and Blue Cross plans.
"GIC was never a part of these discussions," the source said; "sort of a been there, done that -- let's try to see what we can get all our members to agree to." The source said that, at the time, the GIC was "too radioactive."
Negotiations for the new contract began in the spring of 2009, and there were at least 32 sessions.
If ratified, the new contact would cover all unit A employees, or about 350 teachers.
Because of the AEA's size, how its members vote largely determines what Arlington's other eight unions do.
The AEA's ratification meeting is set for 2:45 p.m. Thursday, May 19, at Old Hall, Arlington High School.
The leaders of the AEA last bargained with Sullivan on April 26. Teachers were hoping to conclude its contract May 2, but a snag at the time threatened the agreement. The AEA and School committee reps then met May 10, from 4 to 7 p.m., before the regular School Committee meeting and reached a tentative agreement.
The source described as follows the issue that nearly led to scuttling the deal in early May:
With AEA negotiations, a major sticking point was the School Committee's initial insistence to change the contractually fixed 300 students for guidance counselors (an arbitrator in March ruled in the AEA's favor on this issue).
The AEA's counteroffer agreed to change the threshold of 300 but asked that Ron Colosi Jr., the AEA president, be placed in guidance, with the appropriateseniority designations, based on his had been employed as a METCO counselor starting in 2001.
The union reasoned that with an 0.6 counselor position, Colosi could see about 200 students. (He is 0.4 as AEA president and currently teaches a cooking class as a 0.6 a family and consumer science (FACS) teacher.
To make it work monetarily, the source said, the AEA agreed to drop two unfair labor practices and three grievances/arbitrations that relate to his placement in FACS instead of guidance. The AEA argued, the source said, that this would have saved the town "tens of thousands in unnecessary legal fees" and begin to repair the School Committee/union relationship.
The source said the School Committee refused the offer, and guidance counselors will continue to have 300 students each.
Sullivan has not responded to requests for comment from YourArlington throughout the negotiation. Colosi has responded only once since 2009, and that was last October.
This story was first reported Tuesday, May 17, 2011, and updated the next day.
In a vote that is expected in early June, Arlington residents could face two override options that would raise taxes on the town’s average-priced home by $425 to $560 a year.
One option would raise the property taxes on the average Arlington home, valued at about $479,000, by about $560 a year. It would increase the property tax levy by about 9.1 percent and bring in an additional $7.9 million in revenue for the town, said Selectwoman Annie LaCourt, who cochaired the Long-Term Planning Committee, which suggested the proposal.
The second option would raise about $5.9 million with a property tax increase that would tack on about $425 more per year to the tax bill on the average home, LaCourt said. It would also generate another $2 million in savings and revenue by switching the town’s trash-removal service to a pay-as-you-throw (PAYT) program. The town has been discussing a program that would charge residents $2 for every bag of trash.
Selectmen could vote as soon as their next meeting, Monday, April 4, on whether to hold a special election for the override proposals. Voters will be asked to choose yes or no on the two options.
Selectmen Kevin Greeley and Clarissa Rowe said Monday, March 28, the election would need to be held in early June before the end of the fiscal year. Teachers must receive layoff notices by June 15.
The tax increases are being proposed as a way to avoid layoffs and sharp cuts to Arlington schools and town services caused by a budget deficit of about $4 million.
About 13 percent of Arlington public school teachers would be cut under current budget proposals, and the town would make cuts to the libraries as well as police, fire and public works departments.
LaCourt said the override proposals suggested by the long-term planning committee are designed to prevent the town from having to seek another override for at least another three years.
The committee had considered suggesting an override that would prevent the town from having to seek another tax increase for another five years, but LaCourt said the additional two years would have made the tax increase posed to voters very large.
The other factor was "uncertainty," she said.
Town Manager Brian Sullivan said that given the state of the economy, seeking a tax increase that would last the town three years made more sense.
Like the previous five-year plan, an override would come with some specific promises to voters and the numbers the committee is recommending are based on the following details:
- 3-year promise not to ask for another override
- Operating budgets can only grow at 2.5% each year
- Healthcare costs grow at 10%
- Special-education costs grow at 7%
- If either of those costs are higher, then the difference will come from the operating budgets
- If either of those costs are lower, then there is more money to spend or the length of the plan could be increased
- An additional $600,000 to the schools for restoration of services cut or reduction of fees increased during FY11
- An additional $400,000 each year to the town specifically for road upkeep
Selectman Jack Hurd, serving in his last meeting before resigning, asked whether the projected override numbers are firm, in the light of current proposql made by union negotiators, who next meet with the manager April 6.
Sullivan said they are. He said that should there be a agreement about healthcare with town and school unions, then any saved funds could stretch the period affected by the override from three to four years.
Selectmen Chair Diane Mahon said the town will present two budgets to Town Meeting this spring. One would include cuts the town would have to make if no override is approved. The other would budget would include the $7.9 million of additional revenue the town would expect to receive under both override proposals.
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