May 12, 2020 by Carol Britton Meyer
In the spirit of moving forward together -- with the best interests of town departments, the schools, and Hingham citizens uppermost in mind during a difficult time in Hingham's history -- the Selectmen and School Committee support what they consider to be an "active and forward-thinking" Fiscal 2021 Financial Management Plan proposal to address an expected COVID-19-related $3 million-plus budget shortfall.
The plan, which also needs the Advisory Committee's support in order to be implemented, is expected to be posted on the town website today.
"Monday's vote [at a late-afternoon teleconference School Committee meeting, which the Selectmen and other town officials attended] was a great example of collaboration between Town Administrator Tom Mayo, Assistant Town Administrator Michelle Monsegur, Dr. Paul Austin [Supt. of Schools], [Director of Business and Support Services] John Ferris, the Selectmen, and the School Committee during an incredibly stressful time," School Committee Chair Michelle Ayer told the Hingham Anchor following the meeting.
"A tremendous amount of work went into creating a well-considered plan to address the many challenges that lie ahead, and the School Committee looks forward to maintaining this collaborative spirit as we navigate through this [COVID-19] crisis together," Ayer said. Six School Committee members voted in favor of the plan, with one abstention.
The Advisory Committee will discuss the proposed plan at their teleconference meeting tonight, and also on Thursday, both at 7 p.m. It's not clear at this time when they will take a vote.
"Our Advisory Committee colleagues are important partners in this [effort], and we need to give them the time and the opportunity to internalize [the details of the plan]," Selectman Mary Power told the Hingham Anchor today.
Selectman Chair Karen Johnson called the process "very collegial" -- an example of "great teamwork" among all those involved.
"The plan we're trying to put forward will send the message to Town Meeting that we understand the financial environment that we are in and that we, as always, will steward every single tax dollar that comes through the door," she said. "This plan will help us manage through this unprecedented crisis in a methodical, data-driven way that will not be unduly disruptive."
Power expressed appreciation for the collaborative work on this effort to bring it to this point. "This is the best of Hingham. These are really tough circumstances we're in, and there's a lot of uncertainty. We've been working together in a responsible manner to be both fiscally responsible and to avoid disruption of town services, which would be one more disruption in our citizens' lives."
Long hours
Power expressed appreciation for the long hours put in by town staff, volunteer board and committee members, and school officials to develop this proposed plan in the midst of many other pressing challenges.
As background, the revised Fiscal 21 revenue assumptions do not support the full expenditures identified in the Fiscal 21 budget approved by the Advisory Committee earlier, due to expected revenue shortfalls associated with COVID-19.
These potentially include a decrease in property tax collections and meals tax and motor vehicle excise tax revenues, and lower than originally anticipated state aid. Seventy-five percent of the town's revenue comes from property taxes, and about 10 percent from state aid.
"If approved without alteration by Town Meeting, such a budget would likely produce an impermissible deficit of approximately $3.3 million," the financial management plan states.
The plan proposes to use a portion of the "rainy day" fund balance and "prudent management controls" to close the anticipated gap and to offset any incremental revenue shortfalls that might occur in Fiscal 2021. "This is about as rainy as it gets," Power said.
As of June 30, unassigned fund balance totaled $30.5 million, of which $7.6 million was in excess of the recommended [by financial experts] maximum of 20 percent of total annual town expenditures. "Without a healthy fund balance we would be looking at some tougher decisions," Power said.
The plan takes a multi-year approach "because we don't know how long this situation will last or how bad it could get. There's a good possibility that the effects of COVID-19 could last beyond one year or even further," Power said. "What I like about this plan is that it keeps the door open, giving the town maximum flexibility at a time of great uncertainty. We may be able to move forward with all our budgeted initiatives, but it also includes options."
The proposed plan was vetted with the town's financial advisors to find out how using a portion of the fund balance might affect the town's AAA bond rating, if at all. "We were told that the combination of using part of the fund balance and having a plan in place should things get worse isn't expected to affect our bond rating," Power said.
Moving forward, contingent on Advisory Committee support for the plan -- "we have a framework and a process as we learn more about the impacts of COVID-19 as to how the town will work together to deal with whatever happens," Power said. "The School Committee [and other school officials], the Advisory Committee, and the Selectmen are all in this together, with the common goal of meeting the needs of citizens, students, [and all interested parties] with as little disruption as possible."
Sound fiscal stewardship
The goal is to produce a balanced Fiscal 21 budget "that also minimizes disruption to municipal and school operations and services, takes account of COVID-19-related expenditures, and preserves the town’s longstanding practice of sound fiscal stewardship as measured in part by the Town’s AAA credit rating," according to the plan.
The plan includes identified metrics and management actions in order to preserve the town's ability to meet changing and evolving fiscal challenges. A key piece, Power said, was the close collaboration between Mayo and Austin.
While the proposed Fiscal 21 Financial Management Plan fully funds all Fiscal 21 budgets as previously approved by the Advisory Committee and supported by the Board of Selectmen and the School Committee, the plan requires "immediate implementation of spending controls and cost reduction and/or deferral measures particularly at the start of the first quarter of Fiscal 21 to prepare for the possibility of greater-than-projected shortfalls."
Should such shortfalls occur at any point in Fiscal 21, the plan requires that the municipal and school departments manage their respective operations to deliver prescribed savings.
The Town anticipates significant reimbursement of eligible COVID-19-related expenses under the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, but the amount and timing of those funds is uncertain.
Strong fiscal control
The Fiscal 21 Financial Management Plan puts a strong fiscal control framework in place to ensure that the Town will meet its goal of managing to a balanced Fiscal 21 budget. "Rather than prematurely reducing operating budgets or imprudently relying on fund balance to close incremental revenue deficits, the balanced approach presented [in this plan] protects the town’s long-term financial position while minimizing disruptions to the delivery of services to Hingham citizens and allowing for responsible use of available reserves to mitigate the economic impact of COVID-19," the plan states.
Selectman Joe Fisher has great respect for the process, and found conversations with School Committee members and Austin to be very helpful. "I wanted to hear if there were any [particular] issues to consider that I would take into account and properly address when considering the proposed plan," he said. "They all have a good sense of the financial issues and the unknowns that we're all facing."
From Fisher's perspective, it's like "starting out with your foot on the brake, and as we get more clarity, we will hopefully be able to ease off the brake and move forward, rather than first moving forward and then having to slam on the brakes. There is good synergy -- with town officials, town departments, and the schools really working together."
For further information, refer to the plan posted on the town website here.