It has been widely reported that those with their finger on the financial pulse of their respective towns have been direct in telling the ORR School Committee members that their budget request was excessive. In turn, the school committee has been equally direct in saying, “We need more.”
However, on March 21, the ORR School Committee did vote to accept a budget increase of $320,000, a sum falling far short of the $800,000 plus they were seeking. The FY18 ORR school budget was set at $18,093,215. Mattapoisett’s share of the total school district budget is $5,420,566 for FY18, with total school aid certified at $987,558.
As the dust settled, Mattapoisett Town Administrator Michael Gagne moved towards focusing on the future – a future he believes holds the rising specter of financial disaster for the Tri-Towns. Thus, the tone was set for the March 23 meeting of the Mattapoisett Finance Committee.
When asked about recent ORR School Committee meetings, Gagne said, “OPEB (other post-employment benefits) to me is probably the biggest problem to come…. It has all the potential to impact bond ratings.” Gagne said that OPEB stands at $21 million for ORR, without one dollar being set aside in a trust fund.
Gagne explained that state and federal regulations allow municipalities to set up OPEB trust funds that can yield as much as five percent in annual interest, a much higher percentage than allowed in other saving plans. “Those trust funds can’t be touched for anything other than paying for OPEB,” he said.
“The retirement pool is getting bigger … people are retiring younger. That means they are not eligible for Medicare so we have to pay the same insurance rate as we would for active employees … that is costly.” And without money set aside to pay these rising costs, Gagne believes there is the potential for financial ruin to the towns.
And as for soaring health insurance costs, Gagne said rates climbed 11 percent this year.
Gagne told the FinCom members that OPEB needs to be a line item in the school budget. “It’s not something whimsical.”
Gagne then asked the support of the committee in seeking the selectmen’s approval to move forward with an ‘operations and fiscal strategic review’ of ORR district spending in partnership with Rochester and Marion.
“I want to do a five-year study of the budget…. Let’s get a professional to come back with some recommendations,” said Gagne. “We need to drill down…. This is the way to get the towns the information they need to make decisions as to where we are going in the future,” Gagne stated. The committee members gave their support.
FinCom member Betty Pennington asked, “Isn’t it the responsibility of the school committee to allocate their money?”
“Yes, they have complete autonomy. They can move money around as they want,” Gagne replied.
Gary Johnson, another committee member, interjected, “But the problem is OPEB and retirement.”
Gagne said that several years ago Mattapoisett had added a line item to fund its municipal OPEB liability. Of the ORR budget, he said, “We need analysis … we can’t go another two years [without savings] … we have got to plan.”
Johnson asked, “Can’t we say, ‘You build an OPEB plan or we’ll do it for you and take it out of your budget?’”
Gagne responded, “Yes.”
When asked about a Proposition 2½ override, Gagne stated, “That would be a Band-Aid … we need to identify the problems, achieve fiscal prudence, and tackle the problem.”
The Tri-Town board of selectmen representative during the ORR school negotiations was Mattapoisett Selectman Paul Silva. In a follow-up, Silva added to the school budget conversation.
Silva said a request to have a bifurcated health insurance plan for new hires had failed to pass. “This year we needed a 50-50 split.” He also expressed concern that the district’s Excess & Deficiencies budget line item, a reserve fund, Silva explained, that is set aside for emergencies and had once held $800,000, had been “drained away” over the years to balance the ORR school budget. “That’s not how that is supposed to be used,” Silva said.
In other FinCom business, Gagne provided the members with an administration budget that includes increases to group health insurance – up $202,000; Medicare tax up $35,000; and workman’s compensation up $21,088. Gagne also said small increases were needed for the tree warden – $2,164 to cover tree maintenance and removals; shellfish propagation – $4,000; and $6,576 for the natural resources department primarily for shellfish policing he said. Ending on a positive note, Gagne pointed to savings in utility expenses to the tune of $20,000.
Meeting with the committee members on this night was new hire Heidi Chuckran, CPA, to discuss the town accounting department budget. Chuckran is the former City of Brockton auditor whose experience and expertise were lauded by Gagne.
Chuckran said that Mattapoisett “is a hidden gem” and that “not many towns fund their OPEB,” a critical area she said.
Chuckran presented a level-funded budget for her department with small upticks in seminars, conferences, and statewide travel. She said these were necessary to maintain her certifications.
The next meeting of the Mattapoisett Finance Committee is scheduled for March 30 at 6:30 pm in the town hall conference room.
By Marilou Newell