RAMER: The real facts on the $3 million cut from Education

Letter to the editor from Jeff Ramer, a Democratic member of the Town’s Board of Estimate and Taxation

A certain abrasive Chicago politician who I prefer not to name, quipped unattractively recently, “Let no crisis go unexploited.”

One civics lesson from last Monday’s events for those who may have been disappointed, is that voter turnout for municipal elections is regrettably low, and that it may be important that people turn out to vote at those elections and be thoughtful about who they may wish to vote for. Traditional party loyalties may have little relevance to municipal issues. Elections have consequences.

On March 2, prior to COVID, the bipartisan Budget Committee of the BET, having met extensively with Schools, compiled and recommended to the full BET an Operating Budget for Schools of $166,432,976, a 1.88% increase over the prior year.

There is a side note here that becomes relevant later: After that process was essentially done, Schools brought to our attention that they may be running materially over budget this year in the line item for tuition for out-of-district placement of special education students. The obligation to provide those services is compelled by law, and is difficult to predict without knowing what students will come into the System next year. In the last fiscal year, we had budgeted that item at $5.4M, and it overran its budget at $5.6M. In the current year, we had budgeted the item again at $5.4M. Schools was warning us that they had reason to believe that this item may be running overbudget this year by an additional $1.2M. Our concern was that we had budgeted that item for next year again at $5.4M, which now seemed unrealistic. Probably we had budgeted them short by about $1.2M to $1.5M. It would need to be changed.

Then COVID hit.

On April 23rd, just two days after the last Public Hearing on the Budget and just two business days before BET final “Decision Day” voting on the Budget, the Republican members of the BET published to the Democratic members a thirty-one page memorandum, containing nine charts. I suppose that we are to believe that this Opus was not available for the Public two days before or available to their Democratic colleagues a little more generously before the voting. Their memo argued for strenuous budget cuts in response to COVID. Its essential points were as follows:

(a) It urged that Revenues to the Town should be predicted to fall by $5,937,838, consisting of:

State and Federal grants falling 100% from $1,637,838 to zero.

Conveyance taxes falling 80% from $2,500,000 to $500,000.

Building permits falling 20% from $5,000,000 to $4,500,000.

Interest income falling 18% from $4,260,000 to $3,510,000.

Recreational fees falling 58% from $521,632 to $221,632.

Beach card sales falling 70% from $1,072,000 to $322,000.

The Republican members contended that the whole $5,937,838 should be offset dollar for dollar by immediate cuts in the Operating Budget for the new fiscal year.

(b) The Republican members’ memorandum presented a list of specific cuts, totaling $5,885,876. As astonishing was it was to see hefty cuts to Schools, it was also astonishing to see their cuts at this precise COVID moment to the budgets of the Health Department and to social services for our most vulnerable. The common theme seemed to be to take each department back to a figure which was the lower figure as between that department’s budget for the past year or that department’s projected budget for coming year. No suggestion here of bothering to tailor the Budget to actual departmental needs in the new year, so long as taxes are cut. In the case of Schools, the proposed cut was $3,068,784, which took its Operating Budget back to $163,364,192, its Budget from the prior year. Equally importantly, the Republican members were rejecting the inclusion in the Budget of the anticipated $1.2M to $1.5M shortfall for the special education out-of-district tuitions. That cost would have to be pulled from other programs, making the Operating shortfall at Schools effectively $4.2M to $4.5M.

(c) The Republican members also presented a list of cuts to the proposed capital projects for next year, reducing the $72,962,000 proposed by the bipartisan Budget Committee by $37,010,000 to $35,952,000. Of the $37,952,000 cut, about $15M were Schools capital projects.

In response, the six Democratic members pointed out that despite COVID, the finances of the Town remained for the moment remarkably healthy. Three quarters of the way through the current fiscal year, the Town had already collected Revenues equal to 98.2% of the amount budgeted for the whole year. The burn rate on budgeted expenses was running about one percent below Budget. The Town is projected to finish the year on June 30th with about $63 million in Fund Balance, our “rainy day fund”. I can never remember a time when our Fund Balance was greater, in either absolute dollars or as a percentage of our total Town Budget. Our fiscal policy is to carry a Fund Balance of between five and ten percent of the total Town Budget, and $63 million is about fourteen percent. COVID certainly may have a big impact, but our municipal finances will start the new fiscal year very strong and with lots of options.

We also pointed out that their projection of State and Federal grants falling to zero, seemed unduly pessimistic. In the prior year, the Town received $5.5M. In the partially completed current year, we have already received $2.35M. Looking back at our experience in the “Great Recession” of 2008, 2009, and 2010, our Finance Department observed that the State had been funding us at about $4M per year, and those sums did not drop. In addition to normal grants, the Town is due reimbursements from FEMA and from the State for construction completed in Glenville and MISA, likely to be received in the coming year. The bipartisan Budget Committee had conservatively projected State funding at $1.67M. We suggested that a reduced projection at $1M would be more reasonable in light of COVID, but not zero.

Of less importance, we pointed out that the sale of Beach Cards was unlikely to fall by seventy percent, and the adjustment may be overstated by $250k or $500k.

Most importantly, we also pointed out that the calculations by the Republican members had computed projected tax revenues using a wrong figure for the Grand List. If they had calculated revenues using the correct Grand List and the current mill rate (meaning holding taxes absolutely level), the projected tax revenue would be more than $3M more than the figure that the Republican members were presenting, using a wrong Grand List and an artificially low mill rate. The correct Grand List was that certified by the Assessor in January, filed with the State, and reported to the BET at its March meeting.

Our reply to the Republican members was pretty straightforward: If they reran their calculations with assumptions of $1M more in State grants, $250k more in

Beach Card sales, and $3M greater tax revenue assuming a correct Grand List and an unchanged tax rate, the additional revenue justified a far more modest cut to Schools, and yet achieved no increase in taxes. Moreover, there is ample Fund Balance available to help ameliorate this “rainy day” and still leave the Town with Fund Balance near the top of its policy range.

There was no interest or counteroffer from the Republican members.

After inquiry, we received information from Schools that indicated that with several painful budget adjustments, they thought that the System could accommodate up to $728k of further cuts, but probably not more without beginning to make fundamental changes to the way Education is delivered in Greenwich.

At the final meeting on Monday, April 27th, we proposed to the Republican members a middle ground: We would agree to the various cuts proposed to the budgets of the various Town departments, agree to $700K of cuts to Schools, agree not to account in this Budget for the $1.5M of special education shortfall which then would be absorbed elsewhere in the Schools budget, and we would join with the Republicans in a substantial list of cuts to capital projects, although our list of cuts at $28,983,000 was somewhat less than the $37,010,000 of cuts by the Republicans.

Again, there was no interest, no counteroffer, and no change of position by the Republican members. We approached the issue several different ways, and each produced a repetitive partyline vote, with the Republican Chair casting the tie breaking vote, 7-6.

When after ten bitter hours the Budget was brought for its final approving vote, it received one final 7-6 partyline vote, requiring the Chair’s tie breaking vote to succeed. I have been on the BET for thirteen budget votes. Never before has a Budget passed without a single supporting vote from the minority party. Indeed it is rare that a Budget lacks all twelve votes. This was probably a first in the history of the Town.

The huge disappointment to the Community of this vote produced a second outpouring of emails, asking that the BET meet further, to at least have discussion. Quite right. On Friday, May 1st, the leader of the Democratic caucus of the BET gave notice on behalf of the six Democratic members, asserting their procedural right under section 5(a) of the Town Charter to summon a special meeting of the BET. Mr. Mason, the Republican BET Chair, nevertheless declined to do so, claiming a procedural flaw under Roberts Rules. He even had that wrong.

It may be interesting to note that this heavy hit to Schools, Health, and other departments actually produces but a small savings to the individual taxpayer. A median house in Greenwich today has a market value somewhat under $2M. A $2M house under the Republican “achievement” will have a mill rate of 11.590 and will have an annual tax of $16,226. Had the Democrats’ proposal been adopted, with just the $700k cut to Schools, the mill rate of 11.682 would have been unchanged from the current year and the annual tax of that $2M house would have been $16,342. The annual savings to Mr. Median is $116 per year, or $58 per semiannual tax payment. I have deep regard for the impact of this pandemic. I just don’t think that the impact will be materially ameliorated by $116.

It is very appropriate for the Town to take sober consideration of the impact of COVID. In all quarters of the Town, our citizens face very real income insecurity and investment losses. But sound fiscal management of the Town’s affairs mandates a steady hand, not panicky overreaction, and certainly not cynical exploitation of difficult times.

Rather, this is a time for focus upon the proper services of the Town upon which our citizens will rely, and most particularly our Educational system. This is about Children, not Politics or partisan advantage.

Jeff Ramer
One of the Democratic members of the BET.