BLOG: Newton Public Schools’ Spending Surge Continues Unabated

On April 16th, Mayor Setti Warren released his FY 2014 budget package for the City of Newton.  In light of the tragedy that took place he opted not to deliver his prepared remarks relating to the new budget.  On behalf of the 31K tax-paying households in Newton, MA, I am here to analyze and evaluate Mayor Warren’s budget.  Mayor Warren and CFO Maureen Lemieux said that they have more work to do in righting Newton’s fiscal ship and I am here to remind them of that.

As always, spending by the Newton Public Schools drives the growth of Newton’s citywide budget.  The Newton School Superintendent’s FY 2014 budget for Newton Public Schools was $187,671,536; up from $178,781,245 in 2013.  School spending increased by $8.89M in 2014 versus 2013 and represented a 5% year-over-year growth.  Of the $8.89M in spending increases, $7.6M was for increased compensation ($3.5M to hire new teachers, $3.76M was for increased compensation of existing employees and $338K was for other compensation).  Expenses other than compensation increased by $1.27M in 2014 and represented a 4.5% increase.  Savings associated with the school lunch program and utilities were more than offset by $1.5M in higher out-of-district special education expenses due to reduced state aid. 

In addition to the $187.7M Superintendent’s budget, Page 174 of the FY 2014 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 $23.55M in 2013 and are expected to exceed $25M in 2014 due to the inclusion of the new Zervas debt service.  These expenses are partially offset by $17M in expected Chapter 70 state aid.

The Newton Schools budget passed by an 8-1 vote on April 8th and Geoff Epstein was the lone dissenter.  In his April 3rd Guest Column in the Newton TAB, Epstein was displeased with the underfunded digital educational program and that the key reason why he voted no.  We can’t help but contrast this vote with Mr. Epstein’s enthusiasm for the recent package of tax increases.  Mr. Epstein made a video expressing his support for it, wrote a February 13th Guest Column in the Newton TAB and maintained a vigorous presence on multiple local blogs.  My colleagues from my former group and I will remind Mr. Epstein that we didn’t defer taking action on naming rights (which would have brought in $2.1M/year and targeted technology) nor are we standing in the way of pursuing increased reimbursement for the 538 non-resident kids in six different programs ($7M/year net of state aid).

Newton Public School’s budget has increased from $65.8M in 1995 to $187.67M in 2014, an increase of 185% (versus 69% for the municipal side, 56.5% for inflation and 17.7% for enrollment growth).  We conclude that the Newton Public Schools’ Spending Surge Continues Unabated.

With regards to municipal operations, the largest increases in the municipal operation line items include the Capital Stabilization Fund Transfer ($2.4M), the Public Works department ($1.6M), Retirement and OPEB benefits ($1.45M), Police ($834K) and Debt Service ($798K).  The $2.4M in increased funds for the CSF are expected to underwrite the future costs and debt service associated with the upgrades to the Fire Department’s infrastructure as well as the renovations to Zervas.    The bulk of the $1.6M increase in Public Works spending is for the $1M in upgrades to Newton’s network of streets and sidewalks.  The increase in Police spending was primarily due to the hiring of four new policemen and the increased purchase of laptops and other equipment.  Debt Service growth is due primarily to $755K in increased principal payments on Newton’s debt.  And finally, we’re hoping that the $1.45M increase in Retirement/OPEB benefit contributions will begin to make a dent in the $231,115,008 in unfunded pension liabilities ($7,400/Newton household) and the $600,986,706 in unfunded OPEB liabilities ($19,300/Newton household).

In conclusion, I can see that Mayor Warren and his team have more work ahead of them with regards to fixing’s Newton’s fiscal position.  Furthermore, we were displeased to see that the amount of increased spending for compensation in the budget was $11.4M (which equaled the amount of the recent override package).  We aren’t against paying city workers competitive compensation but we need to reevaluate how much of the budget goes to compensation and how much goes to fund infrastructure programs.