Town of Arlington, Massachusetts
Report of the Finance Committee
to the Special Town Meeting,
Wednesday, Nov. 6, 2002
TABLE OF CONTENTS (click on a heading to go that section)
Appendices:
REPORT OF THE CHAIRMAN
As you aware, the Town Meeting passed the budgets last June on the basis of level funding of local aid from the State. This position was a reasonable one at the time. Both the House and Senate had supported this position and had voted to increase taxes in order to avoid severe cuts in local aid as well as important State programs. Unfortunately, State tax revenues continued to decline and the Governor vetoed a portion of the local aid, resulting in a reduction of $375,000 to the Town of Arlington.
Legislative leaders chose not to call the legislature back to override this veto. As a result, the Board of Selectmen voted to call this Special Town Meeting to make further reductions in the Town budgets. The distribution of those cuts was determined using the “O’Neill Formula” developed by former Finance Committee Chairman Robert F. O’Neill.
It adds up all available revenues, subtracts fixed costs, and spreads remaining revenues according to each appointing authority’s share of the prior year’s allocation. The Board of Selectmen volunteered to reduce their budgets by $30,000 to help other departments. The following table shows the formula and final reductions and by appointing authority. Since certain budgets had surpluses, even with the overall deficit, these were utilized to lessen the reductions in the major budgets, as seen in the last column. The major reductions are described in more detail in memos from the Town Manager and Superintendent in the Appendices in this Report.
 This financial situation was primarily caused by an economic recession, which severely undercut the revenue structure of the Commonwealth and its ability to continue to support municipalities with local aid. It also impacted local revenues. Unfortunately, the economy has yet to turn around and State revenues continue to lag behind projections. Town officials have been analyzing the possible impact from this continuing situation for future budgets. The results of their work paint a dismal situation for the Town in fiscal 2004 and beyond.
Over the next two years, it is highly likely that the amount of state and federal aid available to Arlington will decrease substantially. In addition, the fixed costs of employee health insurance, pensions and special education will continue to outpace inflation substantially. The only factor that prevented further budget cuts in fiscal year 2003 was the use of reserve funds to a degree that cannot be maintained in the future. The Finance Committee believes this trend and the constraints of proposition 2½ demand that the Town either raise additional revenues or substantially reduce services this spring for fiscal year 2004. Summaries of these analyses are included in this report and will be reviewed at the beginning of Town Meeting.
The following revised budget recommendations for fiscal year 2003 have been submitted by the Town Manager and Superintendent and approved by the Board of Selectmen and School Committee. The Finance Committee asks for your support. As always, we are available to answer any questions you may have.
Respectfully submitted,
Allan Tosti, Chairman
WARRANT ARTICLES
The Finance Committee recommends passages of the following votes:
(Unless otherwise indicated, the following recommendations were by unanimous votes: any exceptions are noted in parentheses following the text of the recommended vote. The Chairman votes only when the recommendation of the Finance Committee will be affected.)
ARTICLE 2 REDUCTIONS IN TOWN BUDGETS
To see if the Town will vote to make reductions in certain Town budgets previously voted at the 2002 Annual Town Meeting necessitated by reductions in State aid or to take any action related thereto.
(Inserted by the Board of Selectmen)
ARTICLE 3 HOME RULE PETITION LEGISLATION
To see if the Town will vote to request and authorize the Board of Selectmen to file home rule legislation so as to authorize the Retirement Board to increase the retirement allowance for certain retirees of the Town who retired under the Early Retirement Incentive (ERI) program adopted by the Town in 1993 so as to enable those retirees to take advantage of Section 90C of Chapter 32 of the General Laws notwithstanding the fact that said retirees served the Town for a period of time less than 25 years at the time they accepted retirement under said ERI program; to determine how the money shall be raised and expended to defray this additional cost, or take any action related thereto.
(Inserted by the Board of Selectmen)
Voted: that the Town does hereby authorize the Board of Selectmen to file Home Rule Legislation to provide substantially as follows(12-3):
AN ACT TO INCREASE THE RETIREMENT ALLOWANCE
FOR CERTAIN RETIREES OF THE TOWN OF ARLINGTON
Section 1
The Arlington Contributory Retirement Board, notwithstanding the provisions of Chapter 32 or any other general or special law to the contrary, shall have authority to increase the retirement allowance of the following retirees of the Town: Walter Amorin, Joseph Paragona, William Towle, Lillian Rowe and Daniel Sullivan, as if these individuals had the benefit of Section 90C of Chapter 32 when they took early retirement pursuant to Section 48 of Chapter 133 of the Acts of 1992, notwithstanding the fact that said retirees’ actual service with the Town of Arlington at the time of their retirement was for a period of time less than 25 years.
Section 2
This Act shall take effect upon passage.
COMMENT:
This article was inserted by the Board of Selectmen at the request of the above-referenced individuals or their representatives. In 1992 the Legislature passed an Early Retirement Incentive Program which permitted cities and towns to offer employees early retirement by which they could add a certain number of years, in Arlington this number was three years, to either their age or service in the retirement system or a combination of both. The amount of one’s retirement allowance is a factor of both their age and years of creditable service. The term “creditable service” means years in the system plus additional time that can be credited even if not earned within the system. An example of the latter is the ability at certain times for Armed Services Veterans to “purchase” their time spent
in the military and add it to their government service time. Chapter 32 of the General Laws, which governs retirement of public employees, makes a differentiation between “actual service” and “creditable service.” Actual service relates only to the time actually served within the retirement system without the benefit of any add-ons such as military service time or early retirement incentives.
Section 90C of Chapter 32 is permissive legislation which allows cities and towns who accept its provisions to pay retired employees not less than 50 percent of the salary of the current incumbent in the position from which the retiree retired. However, in order to qualify for such benefit the retiree must have had 25 years of actual, as opposed to creditable service. The five above-referenced individuals took early retirement when offered by the Town in 1993 but did not have 25 years of actual service but were within three years of reaching this milestone when they retired. It is their position that they were advised that Section 90C benefits would be available to them since they understood that 25 years of creditable service would qualify them when in point of fact 25 years of actual service was required.
Clearly there was some confusion on this matter when these employees opted for early retirement in 1993. It will not be for some time before any of them would see their current retirement allowance fall below 50 percent of their incumbent’s salary, but at some point their allowance will without this legislation. The financial impact on the retirement system’s assets would not be substantial in order to grant this request. As a matter of fairness to these employees the Finance Committee and the Board of Selectmen support favorable action for special legislation to rectify this situation.
Appendix A
ARTICLE 3 HOME RULE PETITION LEGISLATION
To see if the Town will vote to request and authorize the Board of Selectmen to file home rule legislation so as to authorize the Retirement Board to increase the retirement allowance for certain retirees of the Town who retired under the Early Retirement Incentive (ERI) program adopted by the Town in 1993 so as to enable those retirees to take advantage of Section 90C of Chapter 32 of the General Laws notwithstanding the fact that said retirees served the Town for a period of time less than 25 years at the time they accepted retirement under said ERI program; to determine how the money shall be raised and expended to defray this additional cost, or take any action related thereto.
(Inserted by the Board of Selectmen)
Voted: that the Town does hereby authorize the Board of Selectmen to file Home Rule Legislation to provide substantially as follows(12-3):
AN ACT TO INCREASE THE RETIREMENT ALLOWANCE
FOR CERTAIN RETIREES OF THE TOWN OF ARLINGTON
Section 1
The Arlington Contributory Retirement Board, notwithstanding the provisions of Chapter 32 or any other general or special law to the contrary, shall have authority to increase the retirement allowance of the following retirees of the Town: Walter Amorin, Joseph Paragona, William Towle, Lillian Rowe and Daniel Sullivan, as if these individuals had the benefit of Section 90C of Chapter 32 when they took early retirement pursuant to Section 48 of Chapter 133 of the Acts of 1992, notwithstanding the fact that said retirees’ actual service with the Town of Arlington at the time of their retirement was for a period of time less than 25 years.
Section 2
This Act shall take effect upon passage.
COMMENT:
This article was inserted by the Board of Selectmen at the request of the above-referenced individuals or their representatives. In 1992 the Legislature passed an Early Retirement Incentive Program which permitted cities and towns to offer employees early retirement by which they could add a certain number of years, in Arlington this number was three years, to either their age or service in the retirement system or a combination of both. The amount of one’s retirement allowance is a factor of both their age and years of creditable service. The term “creditable service” means years in the system plus additional time that can be credited even if not earned within the system. An example of the latter is the ability at certain times for Armed Services Veterans to “purchase” their time spent
in the military and add it to their government service time. Chapter 32 of the General Laws, which governs retirement of public employees, makes a differentiation between “actual service” and “creditable service.” Actual service relates only to the time actually served within the retirement system without the benefit of any add-ons such as military service time or early retirement incentives.
Section 90C of Chapter 32 is permissive legislation which allows cities and towns who accept its provisions to pay retired employees not less than 50 percent of the salary of the current incumbent in the position from which the retiree retired. However, in order to qualify for such benefit the retiree must have had 25 years of actual, as opposed to creditable service. The five above-referenced individuals took early retirement when offered by the Town in 1993 but did not have 25 years of actual service but were within three years of reaching this milestone when they retired. It is their position that they were advised that Section 90C benefits would be available to them since they understood that 25 years of creditable service would qualify them when in point of fact 25 years of actual service was required.
Clearly there was some confusion on this matter when these employees opted for early retirement in 1993. It will not be for some time before any of them would see their current retirement allowance fall below 50 percent of their incumbent’s salary, but at some point their allowance will without this legislation. The financial impact on the retirement system’s assets would not be substantial in order to grant this request. As a matter of fairness to these employees the Finance Committee and the Board of Selectmen support favorable action for special legislation to rectify this situation.
Appendix C
MEMORANDUM
DATE: October 23, 2002
TO: Finance Committee
FROM: Philip J. Farrington, Town Manager
SUBJECT: Budget Reductions
The Board of Selectmen has voted to recommend the following reductions in the FY03 budget. The positions listed are all vacant.
Public Works:
Eliminate two more positions.
Three positions were eliminated effective July 1, 2002. All were vacant
at the time. The three positions already deleted are:
1. Tree Climber, Parks-Tree Division
2. Motor Equipment Operator II, Highway, Water, Sewer
Division
3. Motor Equipment Operator II, Highway, Water, Sewer
Division
The two positions slated to be eliminated are:
1. Customer Service Representative, DPW, Administration
Division
2. Jr. Custodian, 2nd Shift, Town Hall $ 50,000
These positions are vacant now.
Animal Control:
Reduce hours of part-time Assistant. This job is currently vacant. $ 8,000
Human Services:
Board of Health Full-time Salaries $11,735
The Board of Health Director resigned and the Health Inspector,
Christine Connolly, was promoted. This money is the savings in
the FY03 budget because of lower salaries for two new employees.
Council on Aging -- Nurse Position $ 4,741
A full-time position has been reduced to part-time.
Council on Aging -- Minuteman Homecare $ 2,184
This contract came in under budget
Veteran’s Services Assistance $ 1,340
Expenses will be less than anticipated
Fire Department:
Reduce Firefighter Salary total-bottom line $ 55,000
Police Department:
Reduce Patrolman Salary total-bottom line $ 55,000
Both the Fire and Police departments have several vacancies now
so we are already operating with reduced manpower.
Total $188,000
Appendix D
September 6, 2002
Revised: September 10, 2002
To The Members of the School Committee:
FY2002-2003 Budget – Reduction and Reallocation Listing
Please Be Notified That; attached for your approval is a listing of additional budget reductions and reallocations totaling $158,947.
A reduction of State Aid to the Town of Arlington, of approximately $375,000, was included in the State Budget that was finalized this summer. These reductions to State Aid were not anticipated based on the budget deliberations of the House and Senate in June. However, State revenues were lower than projected at the time of final passage of the State Budget that resulted in State Aid reductions to cities and towns as part of an overall reduction package.
As a result of a Budget and Revenue Task Force meeting to discuss the reduction in State Aid revenues, it was decided that a corresponding reduction in expenditures was required to offset the reduction in State Aid revenues to the Town. These reductions would be presented to a Special Town meeting in the Fall. The School Department share of the reduction target is $158,947 based on the O’Neill formula. The next Budget and Revenue Task Force meeting is tentatively scheduled for Monday, September 23, 2002 at 6:00 p.m.
The attached list reflects reductions to vacant positions, reductions to non-salary accounts, and savings generated through increased offsets. Based on where we are in the school year, these recommendations do not come easily, but I believe they offer the least impact to our operations for the remainder of the year.
Respectfully submitted,
Kathleen Donovan,
Superintendent
Fiscal 2004 Impact
Appendix G
MEMORANDUM
TO: Town Meeting Members, November Special Town Meeting
FROM: John F. Maher, Town Counsel
DATE: October 24, 2002
RE: Proposition 2½ - Ballot Questions
This memorandum is intended to assist Town Meeting Members in understanding the basic tenets of Proposition 2½, and what are the lawful prerogatives of Town Meeting acting within its strictures. A second purpose is to generally describe how ballot questions work as permitted under Proposition 2½ since this office has received several inquiries concerning same.
A. General Overview of Proposition 2½
Proposition 2½ places constraints on the amount of the Town’s tax levy that can be raised in any year, and how it can be increased from year to year. The tax levy is that amount that is raised by a community from property taxes each year to be spent for its municipal purposes. The levy limit is calculated annually based upon the community’s previous year levy limit. The prior year levy limit is increased by 2½ percent plus any new growth added to the community’s property tax base during the year. New growth means new construction or construction added to existing structures. Town-wide revaluation of property does not change the levy limit. The only other way of changing the levy limit is by an override, which permanently increases the levy limit. Overrides should be
distinguished from both capital outlay expenditure exclusions and debt exclusions, which only temporarily raise the levy limit. We are all aware of the debt exclusions, which have been voted in the Town for the school renovations and construction projects. Once the interest and principal for these projects have been retired through the increase in the tax levy, then the increase in the tax levy associated with them disappears.
B. Overrides
Provided a community is below its levy ceiling, a matter not relevant here, a community can increase its levy limit by the amount of an override. The Board of Selectmen is the only Town body that can place a question on the ballot for consideration by the Town voters. A two-thirds majority vote, i.e., four members, is required to place a debt exclusion vote on the ballot, whereas a mere majority of three Selectmen can place an override on the ballot. Proposition 2½ specifies the form of the ballot question. The question must state the purpose or purposes for which the monies will be used. The degree of specificity required depends upon the type of question. Override questions are designed to increase the amount of revenue generally available for appropriation. As a result, the spending purpose
in an override question may be broad in scope, such as general or departmental purposes. More specific spending purposes may also be stated, such as money for specific departments. An example of the former would be:
“Shall the Town of Arlington be allowed to assess an additional ### dollars in real estate and property taxes for the purposes of funding the operating budgets of the Town and the schools for the fiscal year beginning July 1, 2003?”
An example that would have more specificity would be:
“Shall the Town be allowed to assess an additional two million dollars in real estate and personal property taxes for the purpose of funding the following departmental expenses: School Department, $750,000.00; Public Works Department, $250,000.00, etc.?”
The questions can be even more specific by detailing particular employee positions in a department that would be funded by the override, i.e. to pay for 5 teachers or 5 firefighter positions.
There can be multiple questions which are either of the “menu” or “pyramid” variety. The menu approach poses two or more questions, each of which will fund different purposes or programs. Each stands on its own merits. Those questions that get passed add to the levy limit and obviously those that do not pass do not effect the levy limit. The pyramid override approach provides voters with a choice of two or more funding levels for general spending purposes or for specific spending purposes or programs. A separate question is presented for each funding level, but all questions are for the same purpose. Therefore, if the voters approve more than one question, the question stating the highest funding amount prevails. Conversely, if
all are disapproved, then the override fails.
The final matter for consideration involves sequencing of options. The first scenario posits the election override first and then the consideration of the appropriation by Town Meeting. If the referendum passes, then the Town Meeting can choose to make the appropriation for the purpose stated in the override up to the dollar amount in the override question. The second sequence is to have the Town Meeting vote prior to the override. If the appropriation had failed at Town Meeting but an override question authorizing the spending exceeding the appropriation passes, then Town Meeting can come back into session and make the appropriation if it so chooses provided it is consistent with the override. The third option is the contingent appropriation whereby the Town
Meeting appropriates two budgets, one of which is higher and is contingent upon the override. If the referendum passes, no further action of the Town Meeting is required and the higher appropriation is validated. If the referendum fails, the lower appropriated amount prevails and the higher appropriation is null and void. There are time constraints from the time the Town Meeting meets and when the override must be held thereafter when this contingent approach is utilized.
I hope that the foregoing proves useful.
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NOTE: Not included in the online version of the Finance Committee report to Town Meeting for Nov. 6, 2002, is information from the Town Clerk's Office about votes taken at the 2002 spring Town Meeting.
Source for all information: Allan Tosti, Finance Committee chairman; and Nancy Galkowski, deputy town manager
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