During a special meeting on Tuesday, April 25, the School Committee voted to accept Mayor Fuller’s in-meeting proposal to transfer responsibility for making Newton Public Schools (NPS) employees’ Other Post-Employment Benefits (OPEB) contributions from the NPS budget to the City budget. This proposal effectively rejected Ward 2 representative Chris Brezski’s proposal, previously released to the public, to reallocate NPS Fiscal Year 2024 (FY’24) OPEB contributions toward classroom uses. His proposal was made in response to the $4.9 million shortfall that has been projected for FY’24 in the proposed NPS budget, resulting in cuts to educator positions and to student programs.
Chair Tamika Olszewski emailed this statement to Fig City News, via NPS Director of Communications Julie McDonough:
“This morning the School Committee, by a 6 member majority, voted to remove the current post employment health care benefit or OPEB contribution for NPS employees from the NPS budget and transfer the payment obligation over to the City budget. Additionally, the Committee has taken up consideration of a motion requesting that Interim Superintendent, Kathy Smith, revise her budget recommendations to include the addition of approximately $782,000 for additional middle school staffing to address the School Committee’s class size budget guideline. That motion was tabled, pending additional information, until the Committee’s Thursday, April 27th meeting.“
Mr. Brezski’s memorandum had been heavily debated in a School Committee meeting the previous evening, on April 24. Mayor Fuller included the City’s Chief Financial Officer, Maureen Lemieux, and the City Sustainability Co-Managers, Bill Ferguson and Ann Berwick, in the meeting to discuss the ramifications of NPS delaying OPEB contributions and not remitting renewable energy credit (REC) payments to the City as part of NPS’s electricity purchases.
Prior to this week’s meetings, Mayor Fuller announced via her weekly e-newsletter on Thursday, April 20, that the City had restructured the City’s employee Medicare Part B reimbursement program to save $650,000 per year that can be allocated to NPS. This news addressed the second of Mr. Brezski’s three cost-saving proposals, a partial victory for Mr. Brezski, leaving OPEB contributions and REC payments as the remaining items to consider.
CFO Lemieux spoke at length Monday night regarding her view that reducing OPEB contributions would cause the bond rating agency Moody’s to downgrade Newton’s debt to “Aa.” Ms. Lemieux did not specify whether the possible downgrade would be to Aa1, Aa2, or Aa3, which are three Moody’s sub-categories of bond rating. Mr. Brezski disagreed with Ms. Lemieux’s forecast of the interest-rate impact on Newton’s cost of future debt if such a credit downgrade occurred, with Mr. Brezski opining that the increase would be less than 15 basis points (0.15%) and Ms. Lemieux stating it would be more. Fifteen basis points of interest expense equals $150,000 per year of added interest expense per $100 million of new debt. Mr. Ferguson and Ms. Berwick spoke briefly about NPS’s renewable electricity purchasing program, however they appeared to contradict one another, as Mr. Ferguson cited significant utility bill savings to NPS by virtue of the program, whereas Ms. Berwick stated it was appropriate for institutions to sacrifice today to combat long-term climate change.
The Monday-night meeting ended after almost four hours, with the Chair Tamika Olszewski (Ward 4) requesting that Mr. Brezski postpone putting forth a motion to vote on his proposal until Tuesday morning’s meeting. Following Mr. Brezski making his motion on Tuesday, Mayor Fuller amended his motion by adding a provision for the City to assume administrative responsibility for OPEB contributions, thereby removing that line-item from the NPS budget. This amendment does not change the ultimate legal liability for OPEB, which always rested with the City, but it effectively removed the School Committee from present and future debate regarding the contribution rate. Further, it effectively voided Mr. Brezski’s proposal to re-allocate OPEB contributions to classroom uses, since OPEB would no longer be part of the NPS budget.
The vote on the amended motion was 6 Yes, 2 No, and 1 Abstain. Rajeev Parlikar (Ward 1), Emily Prenner (Ward 5), Paul Levy (Ward 6), Kathy Shields (Ward 7), Cove Davis (Ward 8), and Mayor Fuller voted Yes. Chris Brezski and Tamika Olszewski voted No, with Anping Shen (Ward 3) abstaining. The Mayor previously stated that if Mr. Brezski’s un-amended proposal were to pass, she would reduce the City’s allocation to NPS by an equivalent amount, which would have had the same mathematical effect on NPS’ FY’24 budget as the approved amendment. The full text of the passed amended motion is:
“Move the $3,187,252 Retiree Healthcare Insurance (OPEB) line item out of the Newton Public Schools Budget to the City and it will be the City’s responsibility to fund retiree health insurance for the Newton Public Schools in FY2024 and for the future.”
With the passage of the Mayor Fuller’s amendment, she accomplished her stated goal throughout the FY’24 budgeting process of avoiding any reductions to the OPEB contribution rate, and in addition gained control in the future over managing OPEB funding.
Mr. Brezski did not reintroduce a more limited motion to re-allocate only the REC portion of the NPS budget. The dollar amounts attached to that line-item are much smaller than the OPEB line-item. Following the vote to approve the Mayor’s amended motion, the School Committee turned to discussing other ways to restore classroom spending. Superintendent Kathy Smith prepared this memo to the School Committee, which details the “First Priority Restoration List” of restored cuts that she would recommend if an additional one million dollars was available, followed by additional programs that would be restored if another million dollars were re-allocated.
The ensuing discussion indicated that the School Committee expected to utilize the $650,000 savings from the City’s Medicate Part B reimbursement changes, plus $400,000 re-allocated from NPS facility maintenance, to restore the First Priority list plus the Strings elementary program. The Tuesday meeting adjourned with Superintendent Smith tasked with coming back to the School Committee at its next meeting, on Thursday April 27, with suggestions about how to re-allocate funding to restore items on the Second Priority Restoration List, as alluded to in Ms. Olszewski’s statement above.
Monday’s meeting is available for replay on NewTV here, and Tuesday’s replay is available here.
