On a cold February night in 2014, a group of parents, town administrators, and school staff gathered in the high school library for a presentation on the bad news. In one year’s time, the crowd was told, Grafton no longer would be able to maintain the level of school services that residents come to expect. It was crisis time.
Fast-forward four years and we’re just about back to that point again. Not much has changed. As such, it’s time to start asking what can change, and who has the knowledge and skill set to change it?
Let’s start with budgeting.
Budgeting is perhaps the most crucial aspect of local government. As the old adage goes, show me your budget and I’ll show you your priorities. While any municipality is more than the sum of its parts, all of those parts are strung together in one budget that accounts for all of the dollars a town takes in, and sends them right back out to various services provided, like schools, police and emergency fire services. Because Massachusetts communities operate in the shadow of Proposition 2.5, town management becomes a zero sum game often pitting our neediest residents against our poorest. Understanding the budget is therefore critical to governing well.
Local budgeting, however, touches on something even more fundamental, however: the balance of power between the executive branch of Town government and “the People” who comprise the legislative branch. Smaller communities rely heavily upon local volunteers, in addition to staff and elected officials, to make the bureaucracy work. Nowhere is this interplay between elected officials, staff and volunteers more crucial than in formulating the town budget, and crucial to preserving executive/legislative balance.
Every May, the annual budget is presented to the Town Meeting and is directly voted on by the people. But who compiles the document, who presents it, and why does it matter? It turns out, in an organization operating annually with very little spare cash, it matters a great deal and it informs the nature of the community you live in, perhaps without many people ever knowing that.
Whose Budget Is It, Anyway?
Here in Grafton, we need to shift focus away from a top-down model of budget development, where the Selectmen determine it through the Town Administrator, to a more collaborative model. I firmly believe that no one candidate in this election is going to solve Grafton’s burgeoning economic crisis. It will take the entire community.
While cities in Massachusetts elect a mayor to head their executive branch, and city councilors as their legislative branch, towns engage in more direct participatory government by holding town meeting and electing selectmen to form the executive branch which is aided by their agent, the Town Administrator. The downside to Town Meeting is that the people are largely only really ever given specific line-item information during one or two meetings per year, and aren’t afforded an “insiders” opportunity to determine for themselves the wisdom of spending requests.
The Massachusetts Legislature remedied this problem by enacting Massachusetts General Laws, chapter 39, Section 16, which establishes that all Massachusetts “towns” shall establish finance committees who shall “consider any or all municipal questions for the purpose of making reports or recommendations to the town.” Further, Section 16 provides that every town having such a committee “shall submit a budget at annual town meeting.”
As such, according to state law, the Finance Committee actually “presents” the budget. This conflicts somewhat with the language of our Charter which states that the Town Administrator, through the Selectmen, “presents” the budget… subject to the Finance Committee’s recommendations. Some tension has been generated between the Finance Committee and the Board of Selectmen over the years concerning the question of “whose budget” it is. Does it really matter? Yes and no.
At the end of the day, it’s about how much of a voice the town residents at town meeting should have. Should the executive branch simply decide spending priorities, or should those priorities be vetted through a Finance Committee appointed by the elected Town Moderator? Ultimately, the Commonwealth has decided elected officials need to work in concert with local volunteers appointed to advise Town Meeting to determine spending priorities. That advice has to be meaningful, and to be meaningful, the Board of Selectmen needs a more inclusive approach.
This is about approach to budgeting, more than it is about budgeting itself, but it’s crucial: I want to see the Board of Selectmen return to the mindset that our local volunteers provide a critical resource, and that to operate transparently, we also need to operate inclusively. The law says this is a good idea, and so do I.
Setting a New Course
Once Grafton establishes an inclusive and not exclusive budget process, we can open the door to formulate new fiscal policy with the Finance Committee’s assistance.
In recent years, through my leadership and that of others, the Finance Committee has explored recommended “Best Practices” as established by the Government Finance Officers Association (“GFOA”). If the acronym seems familiar to you, it is because the Town Administrator has publicized his receipt of the GFOA’s “Distinguished Budget Presentation” award, which one Selectmen mistakenly called an “award for transparency” (it’s not, it’s literally just for “presentation”).
Among the many best practices that the GFOA recommends, and which we should explore and implement, are the:
- Institutionalization of good financial management practices.
- Promotion of long-term strategic thinking.
- Establishment of minimum reserve amounts not only for our Rainy Day fund, but other reserve funds.
- Dedication of policies to the administration of grants.
- Implementation of policies that address our use of subsidies or other incentives to encourage economic development.
- Implementation of policies that offer a distinction between satisfying the statutory definition and achieving a truly structurally balanced budget (their words, not mine).
- Implementation of policies that cover the lifecycle of capital assets, including capital improvement planning, capital budgeting, project management, and asset maintenance.
- Implementation of policies addressing how money is expended, including personnel, outsourcing, and funding long-term liabilities.
These items are just the beginning, and should be developed to address a defined issue or issues, preferably through the GSC to establish true community and stakeholder input.
Understanding Long-term Planning
It would be difficult, if not impossible, to determine the wisdom of a particular expenditure in a given year without knowing how that cost will effect an organization in the long run. That is the value of drafting long term financial projections – to determine what today’s policies will have on tomorrow’s residents.
To do that, however, whatever projections you draft have to be within the realm of reason. While none of us have a crystal ball, certain costs, such as contractually obligated union costs or bond payments, are easily ascertainable years in advance. There are, however, variables in every yearly budget. If you want to give Grafton residents accurate projections, you have to understand, and get buy-in for, your variable assumptions, for things like state aid, economic development, healthcare costs, and education, to name a few.
This I where I have contributed the most to Grafton in the past year. I heard recently that one of my opponents was calling for “long term” projections as a platform plank. Please, no one tell him we already have those! The fight now isn’t over whether to do them, the fight is over how “optimistic” the variables should be given historic income and spending in Grafton, and how much we can rely on the projections in hand to determine spending priorities and long term fiscal policies.
In other words, it doesn’t help you to receive projections that tell you everything will be fine if you had to incorporate unrealistic variables to get the answer you want. Just assume you’ll make more income from economic growth and state aid, and that school costs will decrease a point and a quarter, and you’re home! That’s useless. We need leaders who understand that.
That’s why I fought for the creation of the Tri-Com Long Range Financial Planning Committee, which will agree upon state funding, economic development, and school cost variables, among others, going forward.
I also would call for the implementation of zero-based budgeting on the Town side of the municipal budget (it already is performed on the school side). Zero based budgeting (ZBB) is the process whereby each department begins each year on its budgeting starting from zero, and justifying each line item as necessary, as opposed to engaging in “incremental budgeting” which has the effect of simply taking last year’s budget and adding or subtracting a percentage according to town revenue needs.
ZBB has the effect of rationalizing budget cuts and expenditures. It helps decision makers rationalize and explain, or even justifying, their expenditures. It makes the trade-offs between inputs and outputs more transparent. According to the GFOA, “across the board cuts are often associated with the view that departments will need to provide the same level of service for less money. ZBB highlights changes in what departments will provide in relation to the dollars spent.”
Emphasis on Income
Addressing government expenditures is only half of the matter. The budget process in Grafton focuses almost entirely on the expenditure side of the ledger, with almost no emphasis at all on discussing reasonable plans on income, from fee implementation, to PILOTS, to economic development. This should become a routine part of the budget review process.
While I do love our town, it is incredibly hard to change its trajectory, fiscal or otherwise. Change-agents are met with immediate suspicion, as I well know. Push too hard for change, and you are deemed to have “an agenda.” Push not at all, and no necessary changes are implemented, to the Town’s detriment. While my opponent was presumably not paying attention, we established a long range forecast subcommittee that was committed not just to having projections, but having accurate ones that the Town could rely on. That thing… that one little thing… took an entire year of wrangling to get rolling.
Take another look at the long list of economic policies that I’ve researched and recommended, and guess how much work those will take. For that reason, Grafton needs someone already immersed in in the local budget process to even make a dent in achieving positive change. You need someone passionate, dogged and determined to see this through on the Board of Selectmen. Otherwise, in a year’s time, we’ll simply be having the same “what-do-we-do-now?” conversations we’ve had in the past.
And that’s just not good enough for Grafton. In fact, it’s completely unacceptable.