Framingham Could Help Solve Its City Budget Problems by Stealing Ideas from Newton’s Playbook

Moving Framingham’s pension liability payoff date past 2030 or refinancing it with a bond issue, could free up at least $15 million/year.

At 9:13 pm on Monday evening an email popped into my inbox. It was the weekly newsletter from Marc Laredo, the recently elected Mayor of Newton.

I have subscribed to the Newton Mayor’s newsletter for years, as it is a good source of information on how a soundly run city solves its problems. I also know Marc quite well, as we served together during my time on the Newton School Committee.

Marc’s newsletter focused on the FY27 Newton budget just delivered to the Newton City Council, and is especially relevant as Mayor Sisitsky is due to submit his FY27 budget to the Framingham City Council by Friday, May 1^st.

The newsletter can be viewed here.

A number of the its features turn out to have special relevance to our Framingham situation:

1. Presentation: Marc noted that a budget is not just a series of numbers, but it is a statement of values, coupled with sound fiscal practices to ensure that taxpayers’ money is spent carefully and wisely. He went on to explain the thinking behind the budget in some detail, including key priorities, and provided links to both the Newton FY27 budget, including a 455 page budget book, and the FY27-31 Capital Improvement Plan

2. Financial Strategy: Marc also outlined a critically important financial strategy which Newton is using this year to provide a very large measure of financial relief to its annual budget, by dramatically improving the way it handles paying off its pension liability. It extends the pension liability payoff date to 2035 from 2032, and refinances the payoff with a bond. This smooths out the payoff by extending the payoff period from 7 years to more than 27 years. This is much like refinancing a home mortgage to lower monthly payments by extending the term of the loan.

Contrast with Framingham: Presentation

At the Framingham FY27 budget public hearing this past Monday, the Mayor made a brief presentation which conveyed numbers, but not values, and was also missing the major priorities for the FY27 budget. There was no narrative.

This was a charter-required initial public hearing prior to the submission of the budget to the City Council, but it could easily have included the thinking behind the budget process.

One hopes that when the Mayor submits his budget to the City Council in several days, he will provide a robust message, as required by the City Charter, which explains what the budget aims to achieve, what problems it will address, and so on.

One also hopes that the budget will be conveyed in a comprehensive budget book form, as is commonly done in many communities. Budget information has been skeletal in all prior Framingham city budgets. Last year the Framingham community got just a 10 page memo plus a spreadsheet.

The Newton model would be very good to follow.

It may be to too early for the new Chief Financial Officer, Brian Turbitt, to make such a big change, but some progress in that direction would be appreciated.

Contrast with Framingham: Financial Strategy

At the Framingham FY27 public hearing on Monday, the Mayor also enumerated the funding sources he would use to build the FY27 budget: state aid, property taxes, free cash, and also noted the need to make further cuts to reach a balanced budget, as the city is facing a very serious financial crisis this year.

For the first time, the Mayor appears to be inclined to tap some of city’s more than $40 million/year in excess capacity, generated in the past by taxing under the levy limit, by moving the property tax increase up to the 4-4.5% range.

But, even with a 4-4.5% property tax increase for FY27, the city budget would be about $12 million short of what is needed. With $21 million in free cash available, that gap could be filled with free cash, but in FY28, the city would face that gap again right from the start of budgeting.

From the Mayor’s perspective, there are no good solutions this year, and it is really disturbing that he appears inclined to lop off another $2-3 million from the voted Framingham Public Schools budget, which would be devastating for the school system.

Plummeting student performance and substantial experienced teacher flight are dragging the school system down, and nothing in the voted FPS budget addresses either of those problems. Making further cuts in such a situation borders on madness.

It is obvious that the Framingham Public Schools are in trouble, as has been argued in detail in a prior article:

Framingham School Committee Bends to Mayor’s Budget Cuts Despite Teacher Exodus and Declining Student Results

Further, the FPS FY27 budget has two additional landmines embedded in its fiscal planning:

1. $4 million is projected in savings produced by about 100 experienced teachers quitting at the end of this school year. At some point FPS will have no more experienced teachers left, the savings will go away, and this will produce a $4 million gap in future year budgets.

2. The special education reserve fund to cover unexpected high needs student move-ins during the school year has been reduced to zero. In the past it was maintained at about $2 million, so we have a very risky exposure, with no reserve.

An injection of $6 million/year will have to be made in a future FPS budget to solve these problems.

The Framingham Public Schools are on a downward trajectory educationally, largely due to city underfunding in the past, and the Mayor could make things much worse with further cuts at the scale of $2-3 million.

That is where the Newton strategy could be used to great advantage.

It provides another tool to mitigate the city’s financial crisis, and applied in some form could prevent further damage to the schools, and buy time over the next year for the new Chief Financial Officer to put Framingham’s financial house in order.

The simplest approach would be to extend the pension liability payoff date past 2030. The current Framingham annual pension liability payment is $25 million/year for FY27 through FY30. If the payoff date was extended even by a few years, that payment would be lowered sufficiently to protect the FPS budget, and provide relief in a modest manner to the entire city FY27 budget.

A more carefully planned approach to handling the pension liability could then be figured out for FY28.

The only caution, if some variant of the Newton pension liability strategy is employed, is that City Councilor King and his allies on the City Council (Cannon, Leombruno, …) will conspire to use it not to solve problems, but to fund more property tax breaks.

The future of Framingham is tightly connected to the quality of its schools, and we hope that the Mayor and City Council take action to ensure that the school system takes no further damage in FY27, and receives the right level of investment in FY28 to put it solidly on an improvement trajectory.