Who am I?Why am I here?

                                   

    Admiral James Stockdale                         

Presentation to Town MeetingApril 7, 2008Allen NitschelmAllen@TheHomesteader.comwww.ActonForum.com

Improving the Budget Process

• Reduce spending while maintaining services.• Improve sustainability.• Increase transparency.• Provide a system of checks and balances.• Increase efficiency and reduce workload.

Acton’s citizens need a budget process that finds efficiencies and reduces costs.

The Finance Committee should present its budget to

Town Meeting

• Other town boards (BOS, SC) still create budgets.• Finance Committee performs independent final

review and bring it’s budget to Town Meeting.• Finance Committee looks at overall spending and

multi-year forecasts.• Provides a clear benefit to Acton taxpayers.

Should the Finance Committee present its budget to Town Meeting?

• State Law says “yes.”• The Department of Revenue says “yes.”

– See “best practices” section, DLS page.– See “In our opinion” 1993.– See “Annual Budget Process in Towns.”– See “New Officials Finance Forum Handbook.”

• The Assoc. of Town Finance Committees (ATFC) says “yes.”

• Why continue to use a flawed budget process?

From A Guide to Financial Management for Town Officials, Department of Revenue

Most other towns follow this process

– Concord, Boxborough, Littleton, and Arlington are just a few examples.

– A majority of other towns follow this process (ATFC).– Should boards approve their own budgets?– Is that in the best interest of the taxpayers?

Why should FinCom present its budget?

• Reduce spending.• “Bottom Line” budgets• Lower spending will mean lower tax increases

• Maintain town services.• Accomplish objectives through lower cost.• Eliminate waste and inefficiency.• Have same services at a lower cost.

• Provide a true “check and balance.”• Increase efficiency and reduce workloads.• Acton is wasting the Finance Committee’s talent and hard work

if we can’t control spending.

A better budget process will control spending.

Sustainability

• Control current costs looking ahead to future revenues.

• Unsustainable budgets require overrides or layoffs to balance.

• One clue to unsustainable budgets:Look at use of reserves to fund operations (Free Cash, NESWC, school E & D).Those revenue sources won’t always be there.Dept. of Revenue advises against this practice.

Does a budget reduction of $50,000really make a difference?

Increasing efficiency only produces winners.

• Capital spending reduction saves $50,000.• If bonding, savings are greater.

• Reducing recurring expenses saves more.• If you save a $50,000/year salary, and don’t spend it on something else, that amounts to about $1,000,000 in just 9 years.• Could we avoid or consolidate a few positions with an independent review of spending?

We have high taxes– 14th highest in average single family tax bill (2007)– 15th highest in tax rate per thousand (2007)

• Many residents have trouble paying their property tax bill.– Average tax bill about $8,000.

• Reduce future increases by reducing budgets.• The boards spend almost all of their time reviewing

new spending—which is only 5% of the overall budget.

Staff(Town Mgr)

Board ofSelectmen

FinanceComm.

TownMeeting

How our Budget System works now

Staff(School

Superintendent)

SchoolComm.

TownMeeting

Create Budget Finalize Budget Approve Budget

Finance Committee provides advice only

Staff(Town Mgr)

Board ofSelectmen

FinanceComm.

TownMeeting

How our Budget System works now

Staff(School

Superintendent)

SchoolComm.

TownMeeting

Create Budget Finalize Budget Approve Budget

Finance Committee provides advice only

ALG

Staff(Town Mgr)

Board ofSelectmen

FinanceComm.

TownMeeting

How our Budget System works now

Staff(School

Superintendent)

SchoolComm.

TownMeeting

Create Budget Finalize Budget Approve Budget

Finance Committee provides advice only

ALG

Staff(Town Mgr)

Board ofSelectmen

FinanceComm.

TownMeeting

How a new Budget System would work

Staff(School

Superintendent)

SchoolComm.

Create Budget Finalize Budget Approve Budget

Finance Committee presents its budget toTown Meeting

ALG orFinCom

Town Meeting has final approval authority

• But can Town Meeting act as a “check and balance?”

• No successful budget reductions by Town Meeting since 1999.

• 99.94% of the spending requests have been approved since 1999 by Town Meeting ($371,000/$560M).

• Town Meeting does not overturn fiscal recommendations from its town boards, especially when they are all in agreement.

• The ALG works to bring all town boards into agreement. Does this goal benefit taxpayers?

Town Meeting’s future roleIf we change our budgetary system, Town Meeting

will have a much more important role.– Disagreements between boards settled by Town Meeting.– Will hear both sides of an issue by competent players.– We are missing that level of debate and transparency.– Town Meeting will help make real budget decisions.

Town Meeting can have a meaningful role if we change our budget process.

Summary:

FinCom needs to bring its budget to Town Meeting

• Having the Finance Committee play a leadership role will result in lower spending.• Review budgets, find efficiencies, make reductions.• Reductions based on short- and long-term factors.• Improve transparency and increase efficiency. Town Meeting settles any

disputes.• Act as fiscal watchdog.

• Reducing budgets not perceived as FinCom’s job now by its members or the other boards.

We need to change our budget process before the next cycle

• If you would like to help in this effort, please contact me! Allen Nitschelm, (978) 266-2456.Or email Allen@TheHomesteader.com.

• Read articles on this subject at www.ActonForum.com. Articles on this subject are available at our table in the hall NOW and also on our website.

• Encourage your elected and appointed officials to restore a system of checks and balances, or change our town’s by-laws.