Posted by Bob on August 3, 2009 under Daily Blogs | 
Many employees and citizens have inquired as to the early retirement package offered to the Chapter 90 supervisor’s union which was accepted by six employees. There is a misperception that the Borough is offering early retirements. Representatives from Chapter 90 approached the Borough with an early retirement plan which offered several concessions to the Borough including a wage freeze in year one (1) of the contract extension, the removal of certain positions from the bargaining unit, and a stipulation that all future members are enrolled in a defined contribution pension (“DCP”) plan.
The DCP concept has been the norm in the private sector for some time, mainly in the form of a 401(k) retirement plan. Governmental entities, however, have historically offered lucrative defined benefit pension (“DBP”) plans rewarding retiring employees by calculating the employee’s pension as a percentage of the employee’s wage after a certain number of years of service. A concise article comparing the two (2) plans is posted at www.milliondollarjourney.com by linking here.
All municipalities should be negotiating with the DCP concept as a priority. While taxpayers will not see an immediate benefit, future budgets will incur pension savings. The temptation to not properly fund pension plans during difficult economic times will be removed as a pay-as-you-go system will be in place. Budgetary authorities will know exactly what will be required to fund the pension plan, and employees will no longer have any incentive to maximize overtime to increase their pension calculators. While employees will need to be more aware of the financial structure of their individual plans, employees will have control over their funds.
Some may ask why this should be important to the Borough. First, this is the model in the private sector. While government certainly has different purposes and processes than private industry, basic business principals are similar and should be practiced. The private sector long ago abandoned the huge costs of DBP plans in favor of the the DCP model.
More importantly, however, moving to a DCP plan will result in huge savings to the Borough in future years. While pension plans are often ignored by the public during budget discussions and/or political campaigns, the cost and maintenance of DBP plans are significant. The Borough accumulated significant unfunded pension liability over the years which was eventually funded by bonding in 2003. While the Joint Boards of Finance and Mayor and Burgesses have been diligent to properly fund the liability in recent years, the cost is still significant to taxpayers.
While it will take time to achieve the savings associated with a switch to the DCP model, it is about time that we thought about the future. Had previous administrations recognized changes in the pension models occurring in the private sector, we could have bargained accordingly and be enjoying the savings of such DCP plans today. We must stop negotiating contracts simply in a short-term context; but look to the ramifications of the terms years down the road. We can not do things the same way we always have and expect a different result.
Posted by Bob on August 1, 2009 under Daily Blogs |
Yesterday”s article in the Waterbury Republican-American regarding the 2008-2009 Board of Education budget deficit is extremely concerning to all involved. Many hours have been spent in recent weeks attempting to determine the exact amount of the deficit for last fiscal year. All indications show a shortfall in the approximate amount of EIGHT HUNDRED THIRTY THREE THOUSAND and 00/100THS ($833,000.00) DOLLARS.
Taxpayers and Joint Board members will undoubtedly want answers as to how this situation developed and who and what is responsible for such a large deficit. That discussion will take place on Thursday, August 27, 2009, 7:00 P.M., tentatively at Town Hall. More importantly, however, we have a duty to ensure that this does not happen again.
Many of the problem areas that resulted in the deficit for the 2008-2009 budget will be present in the 2009-2010 fiscal year. Borough Controller Wayne McAllister and Board of Education Accountant Joe Tyson have worked to make certain that the Board of Education will have an accurate picture of real financial numbers prior to adopting the 2009-2010 budget. From all accounts, this did not happen during the previous fiscal year.
Once the Board has real numbers, difficult decisions will need to be made. The Board of Education was allocated no increase in revenue from last year’s budget. Costs associated with personnel, health care and utilities have increased. While some will be rightfully angry with the Board of Education and/or administration for failing to properly manage the 2008-2009 budget, we must remember that teachers, paraprofessionals, custodians, principals, cafeteria workers and most importantly students are not responsible for these errors.
Rhetoric and blame will serve to release frustration, but we need solutions moving forward. The following need to be considered:
TRANSPARENCY AND COMMUNICATION:
Many who read this blog are accustomed to having access to links and/or attachments providing detailed fiscal analysis on such issues as budgets, collective bargaining agreements and grants. Unfortunately we are not able to provide this information for the Board of Education because it currently does not exist in transferable electronic form. I still do not have an electronic copy of the Board of Education budget aside from the general numbers which are provided in the municipal budget. We have been assured that this will change with the implementation of the new software at the Board of Education. The availability of information in modern forms is essential to restore public confidence that the Board of Education and/or administration are exercising proper financial management.
One of the significant issues surrounding the current deficit is that Tuttle officials began to know of the problems associated with last year’s budget in late 2008. There were hopes that there would be enough savings in some accounts to cover probable deficits in other accounts. Despite the fact that this represents a poor business practice, the public should have been aware that a possible deficit was on the horizon. This issue received little to no attention during the 2009 municipal election campaigns because so few people knew of the situation. This is unacceptable.
While some have a strong discomfort with the media and/or the dissemination of information, the reality is we are all in the business of government funded primarily by taxpayer dollars. The public has a right to know what is happening and how dollars are being expended, even if that means disclosing bad news.
The new website, www.naugatuckschools.org, is a refreshing and welcome improvement over the previous www.naugy.net site, which should allow administration many options to convey information to the public. We need to ensure we are using the site, including the blog components, to engage and inform the community to maximum potential.
COMBINED BUSINESS MANAGER
Proposals have been made for many years to combine the business manager functions of the Borough and the Board of Education. Administrations from both parties have discussed and/or presented versions of such a plan to the Board of Education to no avail. Both Mayor Bronko and our administration expressed support for appointing current Borough Controller Wayne McAllister in such a capacity within recent months. Such an appointment in May of this year could have helped to mitigate the 2008-2009 deficit before the close of the fiscal year on June 30, 2009. The Board of Education rejected this idea.
I clearly realize that such a combined position could make Board of Education members uncomfortable given the autonomy granted to boards of education pursuant to state law and the historical animosity between the education and municipal governments. The economic turmoil that we are currently experiencing, however, requires us to put aside our preconceptions and act creatively to protect taxpayers. The goal of a combined business manager is not to undermine the authority of the Board of Education but to obtain a uniform fiscal policy and capitalize on economies of scale to save money. Given the vacancy of the Board of Education’s business manager position, the time was right to make this move.
While certain members of the Board of Education would not approve even a temporary arrangement for a combined position, a strong argument can be made that Controller McAllister has been performing many of the functions of a Board of Education business manager during the past month. In addition to his duties as Controller for the Borough, Wayne and newly appointed Board of Education accountant Joe Tyson have devoted an enormous amount of time to unravel the disastrous state of the educational budget and properly account for the 2008-2009 deficit. While certain Board of Education members may disagree with this reality as a matter of principal, those who witness the situation on a daily basis would be hard pressed to believe otherwise. Having professionally served as both the Borough’s Controller and the Board of Education’s Business Manager over the years, no one is more qualified to resolve the systemic problems inherent in the educational budget than Wayne McAllister.
CUTS
There is no doubt that once the 2008-2009 books are closed, difficult decisions will have to be made to avoid a similar situation in the 2009-201o budget. In the Board of Education’s defense, the zero-based budget passed by the Joint Boards in the spring imposes significant constraints given rising costs. This is no different, however, than the overwhelming majority of American families, businesses and municipal and state governments. We have all been forced to sacrifice to some degree as the global economy struggles to recover from the worst financial crisis since the Great Depression.
When inevitable cuts are made, we must exercise all diligence and creativity to ensure that they have the absolute least impact on students. While we may have wants, needs must take precedent and those on the front lines of education should be maintained when financially possible. While it is true that Naugatuck’s student population has declined over the years, the challenges facing certain populations of students have increased as have requirements under No Child Left Behind (NCLB) legislation. While the particular merits of NCLB is a topic for another blog, the reality is the law is the law, and Naugatuck needs to comply.
CONCLUSION
The Board of Education, of which I am a voting member, is comprised of good and caring individuals who devote countless hours to our educational system without compensation. This current problem should not be used as an excuse to vilify individuals or question commitments to our community. Such a course will yield nothing more than divisions that will fester for years to come. What is needed is constructive dialogue, improved business practices, increased communication and transparency, creative solutions and greater accountability from administration. Together we must ensure that the focus of education remains educating students rather than dealing with deficits.
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