Finance Committee Perspective on Weston’s Debt and Discretionary Spending
Weston Town Crier, April 30, 2020
Submitted by the Weston Finance Committee
As follow-up to last week’s article by the Weston Finance Committee, “Fincom Perspective on Weston’s School Budget”, which detailed our lack of support for the proposed Fiscal Year 2021 town budget as recommended by the Town Manager, we want to provide a revised exhibit and some additional perspective on the issues it raises with respect to the town’s many recent amenity projects, and especially the proposed 2020 Recreation Master Plan.
As noted last week, we do not oppose the school budget increase of 3.5%, which is 1.7% after adjusting for accounting changes and legally mandated special education expenses. Rather, we are concerned by the remaining proposed municipal budget in this unprecedented environment. We have recommended deferring all significant discretionary spending and all proposed budget increases which are not absolutely necessary until after the current crisis has subsided. When the duration and economic impact of the coronavirus pandemic is better understood, it may be appropriate to restore discretionary expenses and investments on which there is already broad agreement, and debate other initiatives as may be prudent at that time.
In response to a question relating to a previously published exhibit showing Weston’s Total Debt and Unfunded Liabilities per Household, we have obtained additional regional school data from primary sources to supplement data originally obtained from Massachusetts Department of Revenue databases, the Public Employee Retirement Administration Commission (PERAC), and the Middlesex and Norfolk county retirement systems.
The overall message of the revised chart remains unchanged: Weston’s total level of debt and unfunded pension and retiree healthcare liabilities, now approaching a quarter of a billion dollars, is far higher than in comparable neighboring affluent towns on a per household basis. In FY20, Weston’s total debt and unfunded liabilities totaled approximately $57,120 per household, up from $52,100 in FY18, itself close to twice the comparable town average of about $28,300 per household (+$23,800 or +84%). Further, Weston’s debt and unfunded liabilities are 234% our total annual operating budget, compared with neighboring comparable towns averaging debt and unfunded liabilities at 176% of their operating budgets.
Unfunded employee pension liabilities and health insurance liabilities (known as Other Post-Employment Benefits, or OPEB) constitute most of these long-term municipal obligations. However, since 1997 the Town has authorized a number of large capital projects totaling nearly $213 million, all funded with Proposition 2 ½ excluded or CPA debt. This list includes major renovations of the schools, construction of the new Field School, Community Center, DPW and Police Station, an addition to the Town Hall, Case Campus Improvements, Case Estates Land acquisition, and more recently, Case House Rehabilitation, Old Library (WAIC), Josiah Smith Tavern, and Town Center Master Plan and Burying of Utilities. Outstanding excluded debt against these projects (as well as a number of smaller projects), will total approximately $89 million in General Fund Dept and $101 million in debt when CPA projects are included. This debt amounts to more than Weston’s annual town operating budget.
Most of the major projects approved in the past five years are non-school related and many are partially, if not entirely, discretionary. Aside from the Field School (2012) and the High School science labs (2011), other school building related improvements were completed two decades ago. At some point, we will undoubtedly again need to refurbish or perhaps even replace some of our school buildings.
We have been concerned about the large number, size, and frequency of these various projects. And now, we are extremely concerned by the potential future cost of executing the new Recreation Master Plan, which while involving some necessary fixes to current fields/facilities, also includes many “nice to have” items.
We are extremely grateful for the enormous time, effort, and volunteer commitment that went into the development of the 2020 Recreation Master Plan. The last recreation-related master plan was developed in 2005 and focused on Weston High School athletic facilities and the many athletic fields and tennis courts around town. That 2005 Athletic Fields Master Plan envisioned significant and expensive renovations which were then estimated at $8-9 million including ongoing maintenance. The plan itself contemplated 85% of the necessary funds coming from private donations and CPC funding. Ultimately, 90% of the actual costs were raised privately and/or CPC funded. This 2005 master plan did not envision the 2017 Proctor Field project at the High School, which was almost entirely funded with excluded debt attributed to the school budget.
The 2020 Recreation Master plan has much grander ambitions, including a major renovation of Memorial Pool, replacing and expanding the Middle School Pool, and adding a brand new indoor field house having indoor gymnasiums, indoor fields, and an indoor track. The $100,000 Feasibility Study proposed by the School Committee for a vote at the upcoming Town Meeting is the first step required to execute this vision. This 2020 Recreation Master Plan also contemplates renovations and upgrades to 8 playing fields around town at an estimated cost of $4 million.
We believe these sorts of ambitious amenity projects are encouraged by Weston’s practice of forming ad hoc long-term committees, which become committed to seeing them happen without regard to bigger picture trade-offs or costs. There is a tendency to analyze projects in isolation, and to focus on debt service when presenting projects to the Town (e.g. only $200 per taxpayer per year, based on the median home value of $1.2MM, for the next 20 years), rather than considering that the debt service costs of these various projects add up to a significant increase for years to come.
The ongoing maintenance and operating costs associated with an individual project must also be considered, as these may require the addition of permanent personnel and/or equipment. In addition to the annual tax impact, this debt can ultimately also affect real estate values. When a property is eventually sold, a buyer will be looking at the overall tax bill, which is by far the highest in the state, rather than a small amount per year associated with any one project.
To summarize, again, we appreciate all the hard work that went into the Recreation Master Plan. With regard to this proposal, the desire for many of the discretionary aspects (new indoor field house with indoor gymnasiums, and track and field complex), should be weighed against the cost of required maintenance upgrades (Memorial Pool, Middle School Pool and some fields) – and the likelihood that both the Middle School and High School will require significant refurbishments in the foreseeable future.
The 2005 Athletic Fields Master Plan and 2020 Recreation Master Plan are available on the Town of Weston website at https://www.weston.org/DocumentCenter/View/10135/RMPSC-Report-October-2005-PDF and https://www.weston.org/DocumentCenter/View/22294/Recreation-Master-Plan-2020-PDF.
The full Finance Committee report is available on the Town of Weston website , on the Finance Committee page, at https://www.weston.org/DocumentCenter/View/22549/Report-of-the-Finance-Committee-PDF.