The Angry Vengeance of the Revenue Shortfall

Town asked to dip into reserves
 to avoid teacher layoffs
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By Grant Welker
Herald News Staff Reporter
Posted Feb 12, 2010 @ 09:09 PM
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WESTPORT — Hundreds of school supporters have signed a petition to hold a Special Town Meeting, with hopes of winning approval to take money from reserves and save jobs.
Layoff notices were sent to school workers on Friday, cutting the equivalent of 14 or 15 full-time positions in response to a deficit of about $150,000. Superintendent Carlos Colley said layoffs were necessary after the Finance Committee recommended against taking from reserves.

“We saw this as our only option to prevent layoffs from happening,” said Karen Powell, a co-chair of the group Westport Cares, who helped circulate the petition.
Once Town Hall confirms that at least 200 signatures are by registered voters, the Board of Selectmen must schedule a Special Town Meeting within 45 days. A warrant for the meeting must be posted 14 days beforehand. If selectmen approve the Special Town Meeting at their next meeting, Feb. 22, the meeting could be held between the second week of March and early April.
The layoffs are to go into effect March 15. The layoffs eliminate three elementary school teachers, two middle school teachers, the high school guidance director, campus supervisors at the middle and high schools, and a teacher assistant at the high school.
Also cut are junior varsity sports at the high school and all middle school sports. Athletic Director Gail Silvia, elementary school Assistant Principal Julianna Pasetto and a nurse will have their work hours reduced by one day a week.
The layoffs would be rescinded if a vote passes to take from reserves before March 15, said Colley, who wrote to selectmen urging them to schedule the meeting before that date.
The annual Town Meeting, which already includes a question of whether to take from the stabilization fund to cover the school deficit, is scheduled for May 4. The petition submitted Friday calls for a Special Town Meeting question to take as much as $150,000 from the fund for the school budget.
Parents, students and other supporters have rallied around Colley and the School Committee as the schools seek approval to take from reserves for this fiscal year and to pass a fiscal 2011 budget that increases spending by $1 million, or 6.8 percent. Powell, who has two children in the school system, estimates that around 500 people signed the petition on Thursday alone.
“We got lucky,” Powell said, because basketball games were held that night at the school gyms. “This really aligns people,” she said, talking about the prospect of layoffs.
The superintendent said he wanted to give layoff notices Friday to give workers enough notice before the cuts go into effect. Parents will be able to ask questions and voice concerns after February vacation next week.
E-mail Grant Welker at gwelker@heraldnews.com.

Sorry to see Fall River's  next door neighbor, the Town of Westport, reaching one of those municipal financial crossroads that occurs when the revenue and appropriation lines cross. When they do cross, as they will everywhere in the next fiscal year, Fy11, they do so with a vengeance. I say this because they are about to do something that will lead them down the road to financial chaos and a downward spiral that will make future budget passage go from difficult to hideous in a two year period from this coming April.
 
Rule #1 in public finance is to match regular, recurring operating budget expenses with a reliable, steady stream of matching revenue. Prior to Prop 2 1/2's passage some 30 or so years ago, this regular stream of revenue was solely derived from property taxes. Other local revenue receipts were also available, but prior to 2 1/2 were only a very small percentage of total revenues used to fund local government operating budgets. 
 
With FY11's very sober state aid outlook , with state legislative sources imploring municipalities to plan for level funding, AND NO MORE, for Chap. 70 , or aid to education, and a mimimum 10 % reduction in all other general governement local aid, Westport will be looking at yet another challanging budget process, as will all the communities of the Southcoast region. Yet Westport will consider balancing the current, or FY10, School Department budget by a $150,000 transfer from its Stabilization Fund, which is derived from "one time only" funds and is designed to pay for "one time only" expense items, usually substantial capital items, or paying down debt service on capital items, or as "one time only" paying down of unfunded pension system obligations. It should never be used to fund ongoing general fund operating budgets.
 
Why is this amount of such concern? First, someone needs to start asking why the FY10 School budget is so short. Was it prepared incorrectly, or were revenue estimates off? Whatever procedural issues  might exist must be determined and fixed prior to any additional application of budgeted funds to the School Department.
 

Second, The $150,000 is only to fund School expenses form now until June 30, 2010, the end of FY 10. Let's be polite and say it's an amount to cover half a fiscal year. That means the School Department bottom line needed to be increased by $300,000 to balance, all other things being equal. In other words, not even expanding School services in FY11, the School Department needed and additional $300,000 to brake even for FY10.
 
Third, state aid to education, or Chapter 70 funding, will be no less in Westport in FY11, yet NO MORE,  than it was in FY10. And even though officials in Westport know this, the School Department has put together a request for increased funding of  a million dollars more then budgeted in FY10. I wonder if this request includes the $300,000 shortfall from FY10?
 
Some will say it's an election year and one can expect both the Governor and state legislature will increase local aid across the board before all is done. I'm not so sure when the Governor's FY11 Budget is based on federal funding not yet approved by Congress, and many watchdog groups predicting a Massachusetts revenue shortfall in FY11 of some $3 billion! YIKES!
 
Use of reserve funds are meant for just that, strategic and emergency reserves to meet one time only expenses. Needing to balance any department's operating budget, regardless of department, does not meet that test. It only serves to inflate future operating budgets that have no more monies to pay for them than before  and results in increasing the operating "GAP" bwtween revenues and appropriations. Exacerbating that situation is the very real likelihood that Westport's net general fund operating revenues may well decrease, as will it's ability to increase reserve funds through Free Cash appropriation, due to a decline in general fund 'Unreserved Fund Balance".
 
If the citizens of Westport want to increase School Department funding, which is a completely noble and laudable goal and community priority, the best way to accomplish this would be to pass a School Department operating budget Override. This would provide real revenues on which to base increased operating budget appropriations for an acknowledged community priority.  It's the only realistic long term solution. That, or cutting $1 million plus out of the remaining of the Westport operating budget.
 
Municipal budgeting is now a zero sum game exercise, even with tremendous and creative  participation of citizens, town officials and legislative delegation. Like I said, when the revenue and appropriation lines cross, they do so with a vengeance. To the folks in Wesport  all I can say is try to make sure the crisis doesn't turn into a range war.