(10/31/07)  The Select Board invited representatives from the Select Boards and Finance Committees from Shutesbury, Pelham and Leverett to meet at 2:00 p.m. on Saturday, October 20th at Town Hall to share information about each town’s financial situation for the coming fiscal year.  In attendance were Amherst Select Board members Gerry Weiss, Anne Awad, Rob Kusner, Hwei-Ling Greeney, Alisa Brewer; Amherst Finance Committee members Brian Morton, Alice Carlozzi, Paul Bobrowski, Kay Moran and Marilyn Blaustein.  Amherst Town Manager Larry Shaffer and Finance Director John Musante were also present.  Attending from Shutesbury were:  Town Administrator David Dann and Select Board members Rebecca Torres, Ralph Armstrong and Debra Pichanick; and Finance Committee member Eric Stocker.  Attending from Pelham was Finance Committee member Fred Van Derbeck. No one from Leverett attended the meeting.

Following welcomes and introductions, Mr. Weiss asked Mr. Musante to present details on Amherst’s financial picture for FY09. 

Mr. Musante explained that a multi-year financial plan funded by a $2.5 million override had been proposed for FY08 and would have allowed for relative financial stability, but that the override was narrowly rejected by voters.  He said that a budget providing a 1% increase to the Town, Elementary School and Library portions of the budget was instead presented to Town Meeting and approved, along with a 4% increase to the Regional Schools budget, to meet the regional budget approved by the other towns.  He said that the regional assessment required using $237,000 from reserves in order to balance the budget, and that the hope had been to not use any reserves at all, but that it was still progress over the previous year when $1 million of reserve funds had been used.  He talked about the goal to grow the reserves, and the fundamental problem of recurring expenses outpacing revenue growth estimates.

He said that revenue projections for FY09 include the allowable property tax increase and a reduced rate of new growth, and the projection for 3% net State aid increase, which he said might be too optimistic due to lottery aid issues.  He said that overall, a 2.9% increase in revenues is projected.  

On the expense side, Mr. Musante said that level service funding would require a 6% to 6.2% increase, much of which would go toward funding the 15% expected increase in health care costs to meet claims projections and grow the Health Care Trust Fund reserves to meet State audit guidelines.  He said wage growth has to be anticipated, and that no contracts had yet been settled through collective bargaining for FY09, but that some were settled for FY08 at 1%.  He said that utility costs are expected to increase in excess of the inflation rate but not be as large as recent increases, and said that there would be an increase to the retirement assessment.  He said the total projections worked out to a $1.9 million shortfall from a level services budget.  He said that an allowable budget increase of 2.2% was expected and that how that might be distributed across the Town, School and library budgets was still being considered.  He said that determination of how much of the tax levy to allocate to capital was also being considered, and he talked about the 10% target having been intended to prevent the build-up of deferred maintenance and meet new needs, but that that amount continues to decrease and was only 7% in the current year.  He said that it would probably require an increase of several hundred thousand dollars “to beef that number back up to what we think is a more appropriate level,” and that spending was being deferred to the future, when it would be more expensive, and cost taxpayers more money.  He said that the Town is still pursuing non-property tax revenues through economic development initiatives, collaboration with UMass and the colleges, and discussions with the area towns regarding the cost of services Amherst provides.  

Mr. Morton said that he expects the upcoming fiscal year to be even more challenging than the last, because so much “tweaking” has been done in recent years that no more may be possible.

Ms. Torres said that regional stresses are shared, and that sharing information among the towns was beneficial.  She said the Regional Schools are the main force binding the towns together, and that financial issues must be considered in that regard.  She said that Shutesbury wouldn’t be receiving State education payments at the same levels as in the past, and said the town has not done needed capital projects, citing library upgrades, highway department facility needs, and work needed on the Lake Wyola Dam.

Mr. Stocker said that Shutesbury was early in its budget process and didn’t have as much detail available as Amherst.  He said the situation doesn’t look to be too dire there and that they are projecting having reserves equal to 12% of the budget for FY09.  He said that all departments are being told to expect a 3% increase, and said that that same amount has been used for the last few years and was “livable.”  He said that Shutesbury’s capital spending is around 1% to 3% of its levy.  He said that their financial picture was “good,” though there was concern about the upcoming dam project, for which he said State aid would be sought, but which would need to happen, even without State money.  He said the Board of Health has concerns about water quality at Lake Wyola and in the town center, and that it could ultimately require building a water treatment plant, but not in the immediate future.  He said Shutesbury’s goal is to support the schools as much as possible “within reason.”  This year he said he is assuming no increase in State aid.

Ms. Torres said that Shutesbury uses its reserves to close its budget gap, and had used $150,000 last year, with a current balance of $350,000, and said the Shutesbury budget is about $5.2 million.  Mr. Stocker said reserves have dwindled, and were formerly 15% to 16% of operating revenues.

Mr. Morton said that Amherst has used over $9 million in reserves since FY02, and that reserve levels were now at just over 5% of operating revenues and said that Moody’s Bond Rating has issued an informal opinion that they would be concerned if reserve levels were to drop below approximately 5%.  Mr. Musante noted that the Amherst budget is about $60 million, and Mr. Weiss said that with the inclusion of the enterprise funds, the total is closer to $70 million.

Mr. Van Derbeck said that it is early in Pelham’s budget cycle, and that he had no numbers to provide.  He said that there are indications that Pelham is unwilling to pass a property tax override, and that voters had recently rejected a $22,000 override. He said that Pelham Town Meeting would soon be considering such issues, and that Pelham was facing the possibility of severe problems because its revenues are insufficient to cover the services it wants, and he gave school funding as an example. He said that Pelham’s budget is currently $3.1 million.

Mr. Shaffer explained the conversations he has been having with these and other towns about fire and ambulance service fees.  He said that the fire and ambulance budget is roughly $4.9 million, with about $3.4 million being for ambulance service, and said that about 75% of the emergency calls are ambulance calls.  He said that those calls bring in around 40% or 41% of the total in revenue, which he called “respectable,” and said that leaves $1.9 million to $2 million in expense.  He said that concerns about the University paying its “fair share” for Town services led to a thorough analysis of fire and ambulance services, including where calls are located, the length of response time, cost per call, and so forth.  He said the solid numbers developed through that analysis led to the current Strategic Partnership Agreement with UMass and that the intent was for the University to pay its fair share, and not to have Amherst “unduly enriched” by the agreement.  He said that Amherst taxpayers should not subsidize services to such entities or to other towns, and that the net cost should be paid by the beneficiaries of the service.  He said that he had sent letters to Hadley, Sunderland, Pelham, Shutesbury and Leverett outlining these numbers, including the net costs per call, call analysis per town, what the towns pay and the unit cost information.  He said he talked about Amherst’s consideration of a third fire station, and said that Amherst needs to know if it will continue to be providing calls to the other towns, and for what time period, in order to plan accordingly.  He said that their willingness to pay their “fair share” and commit for the long-term were key things for Amherst to know.  He said that 20% of all emergency calls and 25% of ambulance calls are to communities outside Amherst.  He said the Town needs to clarify why it continues to provide services to others that are costing Amherst taxpayers money.  He said he is sensitive to the importance of these services to the towns, and is sensitive to their financial situations and wanted to give them time to consider the situation.

Mr. Weiss asked about the percentages of calls to the other towns. 

Mr. Shaffer said that Hadley is the largest and Pelham is the smallest, and that Sunderland, Leverett and Shutesbury generate 50-60 calls per year each.  He said that the issue with outlying communities such as Shutesbury is the length of time it takes to respond, and compared that to Hadley, which he said was in close proximity to Cooley Dickinson Hospital.  He said that many Shutesbury transports go to Greenfield.  He said that quality ambulance service is expensive, and that the towns have been getting a good bargain, but that that has to change.

Ms. Torres said that much time had been spent on this issue at the Shutesbury Select Board meeting with that town’s Fire Chief.  She said there was concern about the formula Mr. Shaffer was using, particularly for it combining fire and ambulance costs together, noting that Shutesbury doesn’t typically utilize Amherst’s fire service.

Mr. Shaffer explained that Amherst doesn’t have a separate fire division and that all firefighters are paramedics or EMTs.  He said that around 70% of the fire budget is for ambulance calls, and that the formula reflects that. 

Mr. Weiss said that whether or not it is best to have all firefighters be paramedics is a question being considered in Amherst, but that Amherst residents face the same costs for that arrangement as the other towns. 

There was considerable discussion about the new fee structure.  Representatives from the other towns expressed concerns about the concept and calculation of averages on which the new costs are determined; uncertainty about future increases and the formula determining them, including the sharing of capital costs; the steepness of the new fees and the lack of proportionality to those increases among towns as compared to the previous fee structure.  To that last point, Mr. Shaffer said that the previous fees were based on a per capita calculation, without any relationship between the costs and the calls.  He said the new model was more like an enterprise fund. 

Mr. Shaffer said the cost per ambulance call is $903. 

Mr. Musante listed the FY07 costs for each town and what the costs would be:  Shutesbury was $20,962, and would be $26,365 with the new formula; Pelham was $13,500, and would be $33,000 with the new formula; Hadley was $77,000 and would be $350,000 with the new formula; and Leverett was $19,530 and would be $35,952 with the new formula. Sunderland’s specific amounts were not stated, but Mr. Musante said its costs would increase by $37,000.  Mr. Musante said that overall, an additional $330,000 is needed to fund the ambulance service, and that most of that increase would be owed by Hadley. 

There was some discussion about the possibility for regionalizing the fire and ambulance service.  Some felt such a model would attract State funds, another was doubtful about potential community support.  Mr. Musante said he wasn’t aware of a precedent for such an arrangement.  Mr. Shaffer said he was only aware of regional support for joint dispatch, and said that was being considered.  Ms. Moran said that lobbying for State support of regionalization would be better directed at the regional schools, which she said would have a bigger effect on the budgets of all four towns. 

Ms. Greeney said she was sorry Leverett was not represented at the meeting and asked if anyone knew about that town’s financial situation.  No one did.  She said that last year the Regional School Committee and the other three towns had “left Amherst in a lurch” by passing a 3% regional budget, requiring the Town to spend $237,000 from reserves.  She said she hoped the towns could work together for FY09, and that none would “pull a fast one” on any of the other towns.  Mr. Weiss cautioned her about her word choice, and she apologized, and said she hope there would be collaboration and that no town would be left in an “unpalatable” situation. 

Ms. Greeney asked how likely it would be for the other towns to meet the new fire and ambulance fee structure.  Mr. Van Derbeck said that would be a Select Board matter, but that he personally believed it was unlikely.  Mr. Stocker said Shutesbury’s increase was “not desirable, but doable.” 

Ms. Torres said that the fire and ambulance discussion had run its course at this meeting and suggested that it might be continued at another time with other relevant parties.   Mr. Shaffer said he would be happy to go to Shutesbury to discuss it further.

Ms. Torres spoke in regard to general financial conditions, and said that overrides had allowed Shutesbury to deal with the dramatic growth in the school populations and dramatic decreases in State aid.  She said that the ability to pass overrides has kept the town together, and said that overrides need to come from a sense of town unity.  She said that the Select Board, School Committee and Finance Committee need to work together to support each other and educate the community effectively so that support will be there when there is a need for an override.  She said she hadn’t wanted to bring that up, but that she found Ms. Greeney’s comments “unfortunate,” and said that Amherst needs to take responsibility for the failure of its override and not blame the Regional School assessment situation on the small towns.  She said that she and the others had come to this meeting “in good faith” to have financial discussions and that she wants to continue that conversation.

Ms. Greeney apologized and said she hadn’t meant to offend anyone.  Mr. Weiss apologized also, and said “we are meeting in good faith.”

Mr. Kusner emphasized the point Ms. Moran had made earlier about the greater relative value of seeking more State aid for the Regional Schools, and suggested that the group discuss what it could do to appeal to the legislature for that purpose. 

Ms. Brewer said she wanted to stop talking about lobbying the State for money.  She said she had been active in such efforts while on the School Committee, and that many organizations and associations were doing such lobbying now.  She said that lobbying is not the answer to what this group was dealing with, and that it should be kept separate from their efforts.

There was brief discussion of school transportation and Amherst owning its buses rather than contracting out for bus service.  School Superintendent Jere Hochman was in the audience and said that the issue was being studied by a committee.

Ms. Greeney said she found the concept of regionalization appealing, and noted the duplication of efforts among the Towns, including the number of people serving on each separate Select Board.  She said that a Human Resources position might be possible to share across multiple towns.  She said that she had attended a workshop with State Senator Stan Rosenberg and she said that he had said that regionalization should be pursued for issues that were universal in nature, where communities could cooperate and collaborate.  She said that would provide more of a “cushion” for State aid reductions, and suggested that the group look at ways they might participate as equal partners to reduce the cost of government. 

Ms. Torres said that Amherst’s salaries tend to be higher than those of the other towns and said that might be an obstacle.  She said that collaborating on capital items might be “more workable.”

Many spoke of how helpful the meeting had been and their desire to continue a joint dialogue.  There was agreement that it would be difficult to meet again prior to the four-towns meeting planned by the Regional School Committee for Saturday, January 12th. 

Mr. Stocker returned to the issue of overrides and said that Shutesbury only has them rarely, but that the town officials are more unified in their support for them, which he contrasted to what he said he had read in the paper about Amherst’s divided support among and within boards.  He said that Shutesbury has sought to have “everybody on the same page” and to have an override not for a specific department or budget sector, but for the whole town, because he said “we’re all in this together.”  He said it would seem that Amherst and Pelham would need to seek another override in the future, and suggested to the relevant bodies that “as much as possible, everybody try to agree” how to do it.

Dr. Hochman said that the Budget Coordinating Group (BCG) was looking at long-term financial planning, and issues of information, process and unity related to overrides so that all concerned could learn from the past and move forward if another override is needed in the future.

The meeting adjourned just after 3:30 p.m.

-- Stephanie O’Keeffe