As Town Meeting winds to a close (it is going to continue Monday, April 14th), the concerns I have raised related to our budget process have been confirmed by what has transpired. I have tried to shine a light on some of the problems with our budget process by proposing a few amendments to reduce budgets. I expect to make one more amendment Monday night when the CPC warrant article is presented (see "Third Amendment" below for details.)

On Monday night, I described the problems with our budget process. I am including a link to my powerpoint presentation with the accompanying notes fields intact so you can read what I showed and what I said. Click here to view or, right click on the link to save.

In short, our budget process in Acton is deeply flawed. Not only do we typically "tax to the max," which seems to be the phrase of the year, but we also "spend to the max," and we do that every year. (In FY 2008, we did not "tax to the max" which saved taxpayers over $600,000, but in FY 2009, we need to recoup that taxing capacity so taxes will be rising 4.1% instead of 2.5%. We did "spend to the max" that year, because we used Free Cash to pay to lower the tax burden.)

My presentation showed how the Finance Committee does not perform the role many assume it does, acting as a "fiscal watchdog" on behalf of the taxpayers.

I also argued that Town Meeting could not fill the role; partly because budgets were too complicated to discuss in the detail necessary, and partly because Town Meeting has a consistent history of not approving spending reductions. Who knows why. Maybe it is too much information too soon, and people need time to think about it before they are willing to vote against their elected representatives.

I would love to take some of the $90,000 we are spending on a consultant to increase citizen participation in our new Comprehensive Community Plan to study this phenomenon!

My goal in presenting three spending amendments was to show that Town Meeting would not be an effective alternative to having FinCom do the job that the taxpayers need to have done.

If any of the amendments were to pass, that would be great. Taxpayers would save money. But I wasn’t expecting miracles. Instead, I hoped to show that even with compelling evidence described by me, who has no personal stake in any of these issues and is only trying to represent the taxpayers, and is willing to testify to various issues and violations (as I see them, of course), that Town Meeting was unwilling or unable to reduce spending.

FIRST AMENDMENT: PROCESS VIOLATION
The first reduction I proposed was to reduce the Community Plan request from $90,000 to zero. This was to address a serious process violation. Last year’s Town Meeting approved a Master Plan for $180,000 which was the total cost of the project. During the year, the emphasis changed and an additional $118,000 was spent (note the use of the past tense here) to hire a consultant to expand the original goal to include more community participation.

The goal is noble, but the process is wrong. One shouldn’t spend beyond the approved budget and then go back after the fact and ask for more money. This process violation is clear as a bell.

The same process violation was raised at the Finance Committee, and the group, in its infinite wisdom, chose to recommend the full $90,000 anyway. Remember, the Finance Committee appears to believe that it isn’t their job to "cut budgets." (During this year, they didn’t recommend that any final budgets be cut at all.)

The Selectperson in charge of this warrant article admitted that the Board was "guilty as charged" of the process violation, yet Town Meeting ratified the spending because, I presume, it agreed with the goal.

Simply put, if we reward our decision-makers by approving spending when the process has been violated, we will not teach them not to do it again.

This overrun could have been covered by the $250,000 in extra funds the town said it had not spent in this year’s budget, but Town Meeting approved additional funding anyway.

SECOND AMENDMENT: WASTE, DUPLICATION, INEFFICIENCY, ETC.

My second amendment had to do with reducing waste, duplication, and inefficiency in a specific requested budget; in this case, the technology request by the schools.

This one was the most important, not only because it was the most money ($160,000 of recurring expense), but also because the "expert" in the schools on behalf of the taxpayers was making the proposed reduction…me.

I have attended all of the local school committee meetings as the Finance Committee liaison over the past year. So I think I know these budgets as well as anyone, outside of school staff and some school committee members.

Over the past year, I have repeatedly questioned and complained about this technology request, and I must admit that some of my concerns have been addressed by the school administration. In other cases, I have been satisfied through outside research. One example of this is the Mac versus PC platform issue. The school’s IT department supports both platforms and many would assume that this would be much more expensive than just choosing one. But the (limited) research that I did indicated it wasn’t that big of a deal. So I dropped that issue.

But there were many other problems with this request that kept me busy. I will run through them quickly just to give a glimpse of how complicated some of these issues are, and why you need experts reviewing, discussing, and making reductions rather than voters at Town Meeting.

Keep in mind that with our "bottom line" budgets, nothing reduced at Town Meeting would prevent any type of specific spending. But I think everyone is acting in good faith and if Town Meeting clearly was upset at a specific spending request, the School Committee would take that very seriously and act accordingly.

1. NOT WELL DEFINED
   The technology request was described as a four-year investment with leased equipment and 5-6 new personnel (FY 09). Yet an overall spending plan was not presented. I believe one was produced late in the process, maybe in March, for the equipment purchase, but it did not address personnel. We should not approve spending when the overall cost is not outlined clearly.



2. DUPLICATING EFFORTS
   The schools and the town both have an IT department with managers and staff. This is duplicative. Other towns have managed to integrate (to one degree or another) these staffs and we could save money if we did the same. No efforts were explored in this area this year despite the massive spending request and the grand four-year plan. Believe it or not, the town and schools will not cooperate unless they are forced to, and cutting spending is one way to do it.



3. TOP HEAVY MANAGEMENT
   The school IT department appears to currently have three managers and four workers. The proposal is to add about five new people. This doesn’t sound like an efficient management structure for such a small department. At the very least, this would need much more justification before additional personnel should be added.



4. WORKLOAD INCREASE QUESTIONABLE
   The plan is to lease hundreds of computers to replace machines that are old. From what I gather, at least in this first-year, there will be no "net" additional machines. Why do we need to hire two full-time staff to handle the technical issues? Won’t technical issues decrease with newer machines?


Second, leased machines are all on four-year warranties. Do we need an increase in staff when all repairs are already covered?


5. LEASING VERSUS BUYING
   In the real world, leasing is almost always a worse deal than buying. Our town and schools are sitting on piles of cash this year. Why would we lease these machines rather than simply buy them?
   
   The answer to this may be that if we lease the machines, we are forced to put the payments into the budget, thereby ensuring that a certain percent of the budget is dedicated to capital spending.
   
   This is a terrible reason to spend extra money. Internal bureaucracy should not be an excuse to waste money.
   
   Finally, I do not believe the full cost to lease the machines was shown over time, simply because the lease costs appear to have been generated on Tuesday, April 8, 2008, the day the articles were being voted on by Town Meeting. Therefore, the full cost must not have been reviewed by the oversight committees (the School Committee met at 6 pm right before Town Meeting to discuss this.)



6. WHY SO MUCH HELP
   There are 2.5 FTEs in the budget to assist teachers with integrating this new technology into their classroom. That breaks down into a half-time person per elementary school.

Two problems here. First, we already have a half-time "media" person in each school. I thought the Mac functioned as a multi-media tool and maybe the media person could assume the role of helping teachers out too.

Second, 93% of the teachers surveyed preferred the Mac. At the School Committee meeting, at least 40 teachers showed up in support of buying Macs instead of PCs. With all of these Mac lovers out there, why do we need to hire 100 hours-per-week of assistants to help teachers with the Mac? They either know it themselves or can ask their co-workers for help.

You might wonder how all of these problems could exist and the proposal still passes the School Committee review, the Finance Committee review, and Town Meeting?

If you wonder that, then you understand where I am coming from and why I am so concerned about process.

OUR VETTING PROCESS
Just one more point to make here. I am sure that someone could go down my list of technology request problems above and try to rebut each of the points I have raised. Maybe every point I’ve made is totally wrong. That doesn’t matter.

When there is an independent body like the Finance Committee reviewing proposals, there must be a consistent standard of review that is applied. This makes the system work. Applicants have to do a certain amount of work (which they know in advance) in order to receive funding. When that work is done properly, they can expect the funding request to be approved. This system works because everyone knows what to do and they know that if the request is good and properly documented, it will most likely get funded.

And if this process really works, the Finance Committee members don’t need to spend a lot of time researching, asking questions, etc. Things come in properly justified or they don’t get funded.

In our system now, many things are not properly justified. So when someone like me is able to raise dozens of legitimate questions about a spending proposal, then the proponents have not done their job and the request should be denied.

When this is properly applied, it eventually saves everyone time. But there is a learning curve, and the very first lesson one needs to teach people who request funding is that taxpayers will not approve improperly justified requests. Unfortunately, in our budget process, lesson number one still needs to be taught.

THIRD AMENDMENT: PRECEDENT VIOLATION

When you read a mystery, are you one of those people who goes to the end of the book to sneak a peak at "who dun it?"

I am writing this article early in the morning of the last day of Town Meeting, and I will be proposing a spending amendment tonight to reduce the CPC funding for Exchange Hall.

In this case, the underlying process has been pretty good. A dedicated group of people have administered the Community Preservation Committee’s money to fund various historic, affordable housing, recreation, and open space projects over the past three years. These funds are raised by a surcharge on all of our property tax bills with a matching grant from the state, currently at 100% (so whatever we raise is doubled.)

The CPA (Community Preservation Act) is undergoing changes and we may need to revisit our participation if and when the state match starts to decline, but at 100%, most would agree it is a good deal for the town, even if it is a significant burden on the taxpayers.

I don’t see any waste or inefficiency in the proposal. It would fund painting and repair of the outside structure of Exchange Hall. The building is in bad shape and the cost sounds reasonable for the job.

Unfortunately, there is something else wrong. In tonight’s motion, the CPC is proposing that we support the renovation of Exchange Hall with a $217,000 grant to the owner. This would be giving taxpayer money to a private entity. It would establish a dangerous precedent and should be rejected.

We should be able to accomplish the same goal by turning this gift into a loan, at a reasonable interest rate, so that taxpayers will eventually be made whole and we can still support the renovation of this historic structure.

If this motion passes, we will be telling all owners of historic buildings that they will be eligible for public funding if they just wait long enough and let their buildings fall into disrepair. If enough people get sick and tired and upset at looking at their eyesore, someone will give them money to repair it, and that money doesn’t have to be repaid.

Again, an attempt was made to remove this from the recommendation of the Finance Committee, but FinCom voted in favor of recommending the full CPC amount with no changes. So now Town Meeting becomes the body of last resort.

If you come to Town Meeting tonight or watch on TV, it should be interesting to hear if people argue that the restoration of Exchange Hall is worth it, even if we violate precedent to get it done.

CONCLUSION

I love the symmetry of these three motions. Each one was to a different entity (town, school, CPC), each one was for a different reason (process, inefficiency, precedent), each one was approved by all relevant town boards (BOS, SC, FinCom), and each one was rubber-stamped by Town Meeting (well, with one more rubber stamp to go.)

I did not expect my amendments to be successful, but instead I hope that this illustrates that Town Meeting is not the best place to control overall spending.

And I can testify that spending is not well contained by our town boards either. I don’t mean to imply that any money is wasted, or that there is something illegal or immoral going on. Our town boards and staff all operate with the highest integrity.

But if a proposal to spend $100 goes through the entire process and comes out at the end with the same price tag, then we are unable to reduce spending.

Why is all this so important? Because if we don't have a good process and aren't able to reduce spending, then when we eventually go to the taxpayers for a needed override (and we may be asked for a capital override next year), they will justifiably turn us down because we haven't managed their money well enough. So if you think this is just about getting this or that program approved, then think again.

Speaking personally, I support the town and the schools but given our lack of ability to control spending, the only way to achieve fiscal responsibility might be to refuse any additional monies above and beyond what is available under Proposition 2 1/2.

I do not relish such a fight. I'm trying hard to avoid it. We need to be more responsible and more frugal with taxpayers' money to find the balance between spending and taxation.

Allen Nitschelm is a co-founder of the Acton Forum and serves as a member of the town’s Finance Committee.

CAVEAT: "CUTTING BUDGETS"

I’d like to discuss an important caveat: What does it mean to "cut" a budget.

Evidently, no one likes the word "cut." When I did my slide show presentation, my wife twisted my arm to remove that word and substitute words like "reduce." So if you read that presentation, wherever you see the word "reduce," I’d like you to think "cut" instead.

There is a semantic disagreement over whether our boards "cut" budgets. I claim that, effectively, they do not. Yet our leaders will point to many examples where proposed spending was reduced and how that "saved" money or reduced the proposed budget.

Well, I guess both sides are right. Let me give you a few examples to consider:

1. CUTTING FROM PETER TO PAY PAUL
   If you have two budgets and you reduce one by $380,000, and you authorize the other to spend the $380,000, have you "cut" the first budget?



2. BONDING and TRACKING BOND OBLIGATIONS
   If you plan to spend $800,000 in cash on a fire truck and instead decide to bond it, and put $200,000 down and pay $70,000 a year for 10 years, did you "save" $530,000 from next year’s budget, which is the amount of the reduction in spending for that one fiscal year?
   And are those bond obligations going forward reflected in the mutli-year spreadsheets as future debt obligations?
   
   
3. DISAPPEARING MONEY
   If you propose a budget increase of 10% and then cut that proposal down to 9%, and then down to 8%, have you "cut" 20% of the request? In other words, are decreases to a spending request the same as making cuts?



4. ABOVE OR BELOW THE LINE
   If you have a long list of things you want to buy, and you plan to spend $1 million, and you take an item off the want list for $50,000, but replace it with another item for $50,000 so the total spending amount is the same, have you "cut" $50,000?



5. STATING THE OBVIOUS
   If savings in a spending account like health insurance is recalculated because the assumptions have changed, and the news is good: spending on this item will decrease by $250,000 the next year, can you count $250,000 as a "cut?"

All of the reasoning above was used this year by various elected and appointed officials to defend the status quo of our budget process by implying that, contrary to my allegations, "cuts" are actually being made.