Holding out no more?

A couple of stories on the Globe's website point to the seriousness of the financial situation. Sal DiMasi is actually talking about maybe, just maybe, allowing towns to tax telecommunications facilities and meals. This may not seem like a seismic event but the legislature is very protective of its ability to raise funds and historically reluctant to share that with municipalities. Even if the legislature moves forward with both, there are a lot of towns that won't benefit. It's also likely that they'll make these local options, forcing Selectboards to call town meetings and fight it out.

DiMasi is also considering allowing town's to join the Group Insurance Commmission without having to negotiate with unions. Very few cities and towns have jumped into the GIC and being forced to deal with multiple bargaining units is certainly part of the problem – Claire Higgens in little NoHo has some fourteen to deal with. There are other hooks that make the GIC a non-starter. For a lot of towns, employees (and retirees) pay a greater share of the premiums than the GIC mandates, so joining might actually increase costs. Once a town is in the plan its experience rating gets mixed in with the larger group, so leaving after the five year minimum stay becomes real difficult, if not impossible. Many towns side step the requirement of offering an indemnity plan by using a PPO but the GIC doesn't – it offers a (more expensive) indemnity plan.

Bottom line: Mayor Higgens has it right, give municipalities the same authority over plan design that the Commonwealth reserves for itself. Those of us who've been trying to control costs through organizations like the Hampshire Insurance Trust need to be recognized as well. So when you offer incentives to join the GIC, extend them to other non-profit insurance collaboratives with proven track records.

In search of revenues Tommy Menino is looking for ways to get Boston's tax exempt non-profits to start making payments to the city. This is good news, since Boston is the big dog in such matters (and often carved out as an exception) so if the mayor can make some headway against the behemoths in the Hub, that holds out some hope for the rest of us who live in towns with a significant number of tax exempts. There are lots of arguments, many of them very good, concerning the positive financial impacts a variety to tax exempt organizations have on towns but there are costs as well. Contrary to the op-ed piece in last Friday's Bulletin, you can measure the impacts a facility like Amherst College has on a community. Larry Schaffer's pointed out that New Hampshire (where folks live free or die but do pay property taxes) manages to extract some revenue from colleges. My own modest proposal is to tariff non-profits for the costs of public safety and infrastructure maintenance.

The major tax exempts are well organized and have plenty of lobbying clout, so none of Menino's (or anyone else's) efforts will come easy.

Question One

Budget Blues

Lt. Governor Tim Murray conducted conference calls yesterday with town administrators and managers, following the meeting he and the Gov had with mayors last week. The Patrick administration makes it a point to do outreach to cities and towns. While I grouse about their fondness for mayors, they've been better at keeping in touch with us little guys. This kind of contact was unthinkable during the Mitt reign and for that matter going all the way back to Dukakis.

The news is not good and we didn't get a lot of detail, save that planning for a potential shortfall in the administration began last spring. The hope is to hold harmless local aid, Chapter 70 (education), public safety and social safety net programs. That doesn't leave a hell of a lot to reduce, given the state's spending patterns. Murray was careful to note their intent but left the door open to reductions in all spending. State grants will take a hit and its possible that we'll see reductions in Ch. 90 (highways) as well. The Lt. Gov didn't rule out canceling contracts already written. There will be layoffs and an "early retirement" package is not in the cards.

The administration is modeling past shortfalls and responses to get a better handle on how to respond to this one and the ever-capable Leslie Kirwan is tasked with coming up with an annualized projection of the revenue deficit. The intent is to fix this once but the prospect of repeated adjustments over the course of the fiscal year remain. Of course, this clouds the FY '10 budget process which will be underway in a matter of weeks.

This afternoons press conference will present what the administration sees as the size of the problem and outline the response. Municipal officials are promised an email by 5:00 PM with additional details.

That Pesky Regional School Formula, the first of more than one part.

I think I know the policy wonk's definition of the seventh circle of hell: trying to develop an equitable school funding formula in Massachusetts.

Nonetheless, the folks over at the Department of Education (DOE) and the legislature have been laboring away to find a formula that will distribute assistance and assign costs, in an equitable manner. So it shouldn't come as a surprise that the result is a policy that is complicated, difficult to understand, probably flawed and inherently unsatisfying to those who don't get as much as they anticipated or end up paying more than they expected.

This past year, DOE required regional schools to either assess costs under its statutory method or to use an alternative method. The statutory method involves a calculation by DOE as to the community's ability to pay based on equalized property valuations (EQV's) and wealth, as measured by tax returns. The EQV and wealth calculations are developed by the Department of Revenue (DOR) and provided to the DOE.

The DOE formula is an attempt to introduce some progressivity into regional school funding. Essentially, the wealthier members of a district get to pay more of the costs.

The law also allows for an alternative assessment methodology, in accordance with the regional school agreement. This is also known as the "headcount" method, an apparent reference to dividing the net school spending up on a per student basis, without taking into account the differences in wealth among the district members.

In districts with three or more members, the statutory approach needs a two-thirds vote to pass; the alternative requires a unanimous vote of the members. So even though Amherst holds the majority of seats on the regional school committee, the other members can control the fate of the budget by action of their town meetings.

Amherst approaches the regional school budget with two votes: one to approve the formula for assessing costs and the second to actually appropriate a sum of money. The first, aka Article 16, got voted up on May 10^th, the latter (Article 17) is being fussed over as I write this.

The day of the vote on Article 16, the Hampshire Gazette chose to editorialize in favor of its passage and managed to reflect some of the confusion around the formula. The editorial maintains that the agreement was ratified "several years ago," takes into account all the revenue variables "including the amount of state aid received by Amherst," makes the school system affordable by small towns, and that it would be unfair to change the budget formula this late in the process. The editorial noted that if the state assessment model were used, Amherst's share of the budget would decrease by $154,000; Leverett's would increase by 11.2%, Shutesbury by 1.1% and Pelham's by 48.3% or $468,000.

Let's leave that last bit of innumeracy aside and ask why the three smaller towns budgets go up under the statutory formula? Because based on the data provided, DOE sees those towns with more ability to pay than Amherst. So, if one accepts the logic of the statutory formula, Amherst (Before you flame, note the qualifier at the start of the preceding sentence.) is subsidizing the educational costs of three smaller but more affluent communities.

Contrary to the Gazette, the headcount arrangement was put into effect last year (2006) and ended a series of ad hoc changes to school funding. But why not accept the state formula? More on that later, after we see how things played out at town meeting.

The 1% solution?

Jere Hochman accurately reads the election results and says: "We got the message. It was a 1 percent message." While the Superintendent is ready to stay with the 1% budget, it seems (according to Friday's Hampshire Gazette) he may be standing alone among the education faction. The School Committee Chair, having remarked about the lack of leadership when the override fails, may well be poised to reinforce the truth of that observation by not holding the line either.

Over on the Town side, the Selectboard's thrown the Schaffer/Musante budget plan under the bus after managing to ignore the document pretty much from its inception. The Board's budget recommendations start with a preamble indicating its duty to "make guidelines" for the manager in budget preparation, something that apparently wasn't recognized back in January. Well, better late than never.

(Ms. Brewer, having only recently joined the Board, gets a pass on the tardiness. Besides, it seems like she actually read the document.)

It appears both Hochman and Schaffer have counseled their respective employers to stay the course. Abandoning the 1% budget may well result in a financial food fight and end up in chaos. It's better to make the tough decisions and cut the budget than bet on another override or put off the problem for another year.

Good advice that should be taken but won't. (I also can rely on sorry personal experience, from long ago but not far away, as a selectman. Been there, done that, bought the tee shirt.)

Given the current state of affairs the Finance Committee's recommended 1% budget will not hold. In this lies a lesson as to why the "Amherst Plan" override failed. It wasn't a plan, it was a promise. It carried no legal weight, didn't obligate boards or town meeting to adhere to it. To work the "Plan" required a high level of discipline, communication and cooperation over several years – factors that aren't in evidence now, or in the past. The "Plan" would have been compelling if it reflected unanimity among the boards, emerged unscathed from town meeting and then went before the voters.

It didn't happen that way. One gets the feeling that the Amherst Plan backers wanted everything fairly well locked up before it got to town meeting because they, in their heart of hearts, agreed with James Madison: "In all very numerous assemblies, of whatever characters composed, passion never fails to wrest the scepter from reason."

Reading the reports of the first couple of town meeting sessions, I'd say Madison was close to the mark. We can all hope that present trends don't continue.