Newton Is a City, Not a School District

On April 22nd, Mayor Setti Warren released his FY 2015 budget package for the City of Newton.  On behalf of the 31K tax-paying households in Newton, MA, I and the Newton Taxpayers Association are here to analyze and evaluate Mayor Warren’s budget.  Despite the Warren Administration’s rhetoric about saving money in the budget, the reality is that Newton’s annual spending has increased by $57.5 Million since he took office in 2010, including $42.4 Million for compensation. 

As always, spending by the Newton Public Schools drives the growth of Newton’s citywide budget.  Taxpayers in general and the Newton Taxpayers Association in particular are committed to educational excellence, but let’s keep in mind that we live in a city, not a school district.  The Newton Public School system’s operating budget represents 57% of Newton’s total budget, up from 46% in 1992.  In addition, when one adds millions of dollars of school-related costs that are buried in the city-side budget, and not reflected in the school budget (Page 171 of the FY 2015 budget book), Newton schools consume nearly 65 percent of the City of Newton’s total budget.

The Newton School Superintendent’s FY 2015 budget for Newton Public Schools was $195,129,819; up from $188,102,163 in 2014.  School spending increased by $7,027,656 in 2015 versus 2014 and represented a 3.7% year-over-year growth.  Of the $7+ Million in spending increases, $6.15 Million was for increased compensation ($2.2M to hire new employees and $3.9M was for increased compensation of existing employees).  Expenses other than compensation increased by $874,054 in 2015 and represented a 3% increase. 

In addition to the $195.1 Million Newton Public Schools operating budget, Page 171 of the FY 2015 budget book discusses expenditures made by the City of Newton on behalf of the schools but which are charged to the municipal side of the general fund budget.  Such expenditures include retirement benefits, retiree insurance, long term debt retirement, long term debt service/school construction, student support services (nursing, crossing guards) and general administrative services.  These expenses exceeded $27 Million in 2014 and are projected to exceed $27.5 Million in 2015 assuming 2% growth due to the rate of inflation.  These expenses are partially offset by $19 Million in expected Chapter 70 state aid.

Newton Public School’s budget has increased from $61.9 Million in 1992 to $195.1 Million in 2015, an increase of 215% (versus 89% for the municipal side, 68.4% for inflation and 29% for enrollment growth).  Newton taxpayers can conclude that the Newton Public Schools’ Spending Surge Continues Unabated.  One encouraging note regarding the school budget was when a member of the Board of Alderman’s Finance Committee raised the issue of the 2011 Special Education Review Report, which highlighted nearly $20 Million in annual overspending in the SPED program.

Turning to municipal operations, the largest increases in the municipal operation line items include Retirement and OPEB benefits ($1.7 Million), Fire Department ($1 Million), Police ($640,293), transfers to the City’s Workers’ Compensation Fund ($500,000) and Debt Service ($435,605).  The increase in the public safety departments was due to the new compensation step scale schedule that will take effect in FY 2015.  Debt service growth is primarily due to increased interest expenses associated with higher outstanding levels of indebtedness.  And finally, it is hopeful that the $1.7M increase in Retirement/OPEB benefit contributions will begin to make a dent in the $244,289,236 in unfunded pension liabilities ($7,600/Newton household) and the $601,770,734 in unfunded OPEB liabilities ($19,300/Newton household) as reported in Alderman Ruthanne Fuller’s recent report on pensions and post-retirement liabilities.

Despite Mayor Warren’s rhetoric about creating a $13 Million Rainy Day Fund, the reality is that the City incurred a $12 million deficit from FY2010-2013.  Newton covered its deficit by drawing down cash accumulated in prior years and adding $6 Million in debt and by its own projections will incur a cumulative general fund deficit of at least $12 Million from FY2014-2019.  Despite his rhetoric about saving $20 Million this year due to the new labor contracts, the reality is that annual City spending increased by $57.5 Million since he took office.  Since Mayor Warren has been in office, Newton has increased its outstanding debt and other unfunded liabilities by over $110 Million and Newton now owes $1.16 Billion in outstanding debt and other unfunded liabilities

In conclusion, Mayor Warren’s budgetary rhetoric does not match up with his results.  Newton taxpayers expect more leadership from its mayor and its Board of Aldermen in resolving its budgetary and financial issues.