In a speech to Newton residents and the City Council on Monday evening (text, NewTV’s video), Mayor Ruthanne Fuller presented a proposed FY2024 budget of just over half-billion dollars, an increase of $19.7 million (+3.94%) over last year, aiming to balance the City budget in the face of the failure of the operating override to pass and receding pandemic-relief funds. School-related costs constitute $308 million (65%) of the budget. A Supplemental Capital Improvement Plan for the next five years was also proposed.
Key Takeaways
- Schools: The budget cuts 40 of the approximately 2,100 school positions (2%) while assuring that elementary class sizes remain under 25 and the elementary strings program remains intact. Headcount in the remainder of the City side of the budget will remain approximately constant. When asked whether the 40 positions being eliminated in the school budget represents current staff or unfilled openings, Mayor Fuller said there are always open positions in any organization, and there is a relatively high vacancy rate in teacher aide positions.
- Unfunded Liabilities: The City’s unfunded liability for pensions and retiree healthcare stands at $1 billion dollars. In comments to Fig City News, the Mayor indicated that assessing the trends in unfunded liabilities depends heavily on actuarial assessments, and progress was being made in reducing the unfunded pension liability, but retiree healthcare is more of a moving target.
- Use of ARPA Funds: Since 2021, most of $63.6 million of ARPA funds received by the City have been used: $11.2 million for students and schools (including improved school ventilation, and iPads and Chromebooks for student use), $10 million for Covid response, $9 million for housing and human services, $8.5 million for roads and traffic calming, $5.2 million for economic recovery, $5.2 million for parks, recreation, and culture, $4.3 million for infrastructure for library, seniors, and police, and some for City and school operations. Of the $4.9 million remaining, $2 million will be used for road paving and another $2.1 million for infrastructure repairs and improvements.
- Free Cash: Free Cash from the previous year constituted $28.8 million, including $8 million coming from a contested assessment on Eversource and $2.1 million from an early PILOT payment. $10 million of Free Cash will be used for debt service for the Lincoln Eliot school renovation project. Other uses of Free Cash include turf fields, out-of-district tuitions, public works projects, a new fire engine and other vehicles, a new ventilation system for the library, and an increase in the Rainy Day Fund to 6% of the City’s budget from the current 5%.
- Retiree Healthcare: The City will take on responsibility for $3.1 million of retiree healthcare funding from the School Committee. When asked about the rationale for this move, given that it is all part of the City budget and no constraints dictate the portion that is allocated to the School Committee, Mayor Fuller indicated that these retiree healthcare costs were likely to rise significantly in coming years. She said the school budget has grown unsustainably through the use of one-time funds, and this transfer will help the School Committee stay within its allocated budget.
- NewMo: NewMo, the City’s ride-sharing program for residents, is being reassessed, with fares being reconsidered and the contract being rebid, while maintaining a commitment to help older residents access reliable, affordable transportation. The Mayor committed to continue funding the senior portion of the service at the current $275,000.
- Cannibis Tax Revenue: Tax revenue from cannibis dispensaries has been below forecasts, with community impact payments from Garden Remedies expiring and new dispensary revenues slow to come online.
Seven Steps to Close the School Budget
The Mayor outlined seven steps she is proposing to address the shortfall in the school budget, the winding down of one-time Covid-relief funds, the failure of the operating override, and the long-standing structural deficit in the school budget:
- Use $10 million in Free Cash to reduce debt service for the Lincoln-Eliot Elementary school project and free up $600,000 for operating expenditures.
- Provide a $1.4 million “bridge grant” to NPS to offset the costs of a significant increase in out-of-district placements.
- Extend the deadline for funding the City’s retirement pension liability by one year to August 2031 to free resources to fully fund the $23 million Horace Mann project.
- Restructure health insurance and eliminate Medicare Part B reimbursement to free $680,000 annually in 2024 and 2025.
- Use Free Cash to pay Newton Public Schools’ legal settlements totaling $580,000.
- Allocate the planned 3.73% increase in funding to the school budget (a $9.77 million increase over last year) and move $3.1 million of retiree healthcare expenses from the school budget to the City budget.
- Use $400,000 of ARPA funds to pay for two summers of maintenance projects for school buildings.
City Council budget review and deliberations begin this week:
- On Wednesday, the Programs and Services Committee will meet to review the budgets for the City Clerk/Clerk of the Council, Newton History Museum, Newton Free Library, and Parks, Recreation, and Culture and their associated items in the Capital Improvement Plan (CIP).
- On Thursday, the Public Facilities Committee will take up the Department of Public Works (DPW) budget along with other items, including a request to transfer $1.5 million from DPW Full Time Salaries Account to fund the City’s roadways, sidewalks, and ramps program to reach the target spending of $9.5 million for FY23 (an item that was part of Question 1’s override proposal) and a request to appropriate $1 million from Free Cash to fund DPW vehicle replacements.
The School Committee voted to approve its budget last week. The Programs & Services and Finance Committees will meet jointly to review their recommended budget on Tuesday, May 9. According to the Budget Schedule, the last day for committees to submit budget reports is Thursday, May 25.
