INFO-2024-7 : Joint Meeting of the City Council and the School Committee to be held at 7:15 p.m. on Monday, May 06, 2024 on the financial condition of the City, revenue and expenditure forecasts, and other relevant information on the FY2025 operating budget

Transcript (~21 min @ 13:48)

Speakers identified by voice; unnamed voices are numbered within this recording. Auto-caption text — verify against the video.

▶ 13:46 Speaker 2: Info 2024 dash seven joint meeting of the city council and the school committee to be held at 7:15 PM on Monday, May 6th, 2024 on the financial condition of the city revenue and expenditure forecasts another relevant information on the FY 2025 operating budget.

▶ 14:05 Speaker 3: Thank you Mr. Clerk. Welcome Madam Mayor.

▶ 14:07 Jen Grigoraitis: Thank you. Good evening everyone. Do you need to, you're good to spend suspend anything? Okay. Excellent. Good evening, Madam President, Madam Chair, and the honorable members of the city Council and School Committee. First and foremost, thank you for being here tonight and for your service to our shared community tonight. I'm going before you in my first budget address as mayor, it is as always a great privilege to serve the city of Melrose and its residents and to do so alongside you all and the staff and leadership of our city and school departments. And while I am the one delivering this message, the budget before you is the result of months of work by many. I want to acknowledge our city and school staff, department heads and interim superintendent for their work every day and especially as it relates to planning for next year. And I want to thank the members of the public who provided input about their priorities for the city. We hear you and we appreciate your visits, calls and emails. Tonight I want to do two things to be honest about the needs and challenges of the city of Melrose for fiscal year 25 and beyond, and to present what I see as the best path forward for us to take together. The FY 25 budget I have submitted to the city council for consideration is in the amount of just over $104 million. And while this is a balanced budget as required by law, it is not a budget that we should collectively feel all that good about because it is not sufficient to meet the needs of our city and our schools. In short, it is not the budget that the city of Melrose deserves. And so tonight I am also presenting to the council a request to hold a special election on June 18th for a 7.7 million operational override. This proposed ballot question if approved by the council and then by voters. We'll include funding for both city and school departments starting on July 1st, which is when our new fiscal year begins. And I know that's a lot. So let's start off with the headlines because this is a lot of money funded by our taxpayers with this proposed FY 25 budget, we will continue to serve our residents and students. We will provide the vital services required and expected by the community and we will not be doing it alone. The city of Melrose will receive meaningful federal funding thanks to our congressional delegation. Because of the efforts of Congresswoman Clark and Senators Mark and Warren Melrose will receive $4 million in federal funds to support our efforts to build a new net zero police building and to address recurring drainage issues near Lebanon and Sylvan Streets. These investments help us meet our climate goals and alleviate the burden on taxpayers. They also meet needs that we do not have the capacity to address within our operating budget. And our state partners are also delivering for us. Melrose will receive approximately 50% more in chapter 90 funds, which is our primary source of funding for sidewalks, crosswalks, bike lanes, road rep paving, and of course filling potholes. Our chapter 90 spending would be impossible without the state aid. Virtually all of our transportation infrastructure funding comes from the state, the increases thanks to Governor Healy, Lieutenant Governor Driscoll and the state legislature who passed one of the most generous and earliest chapter 90 bills in a decade this spring. And we were honored to host the governor and the lieutenant governor for the bill signing here in Melrose last week. Our state officials understand the impact that these dollars have in local communities and the great work being done in Melrose to address transportation and pedestrian safety, accessibility and functionality. We also understand that taxpayers need to trust that their money is being put to good use. We've been working tirelessly to ensure that every dollar in our municipal budget is accounted for and used as intended. We have clean audit results for the city and school administrations. And beginning in September at my request, the division of local services of the Department of Revenue will conduct a financial management review of the city of Melrose. Through this process, DLS will provide a comprehensive operational review of melrose's, local accounting, treasury collection, assessing and overall administrative functions with recommendations and how to improve day-to-day management practices and procedures. We have also filed an order with the council tonight to create a solid waste and recycling enterprise fund so that the public can clearly see the use of fees paid by residents to cover the costs of delivering these services. When our neighbors and constituents ask how our money is being spent, we can tell them because we have the fiscal checks and balances and auditing safeguards in place to provide confidence and transparency in our budget numbers.

▶ 18:35 Speaker 6: So that is some of the good news,

▶ 18:37 Jen Grigoraitis: but the truth is there is also a lot that should concern us in this budget in many ways. If you ask me to honestly answer what are we doing in this FY 25 budget, I will tell you we are surviving. We are living within our means and we are having to cut and reduce services in order to do so. This is not a management problem, problem or a philosophical problem. This is a math problem.

▶ 19:00 Speaker 4: When costs go up by nine,

▶ 19:01 Jen Grigoraitis: 9% like our health insurance costs 5% like our out of district school placement costs 20% like our utility costs and city revenues go up by 2.5%. You cannot make that math work and you certainly cannot sustain it without some very significant impacts on our community. And next year will be worse. All our costs will continue to rise and we will continue to be capped by state law at a 2.5% increase in revenue and we have taken some measures this year such as budgeting, 85% of our local receipts, which will reduce our free cash to close this year's budget and will further impact next year's budget. At this moment, very significant gaps remain for both our schools and our city departments and I want us all to understand what they are together. Let's start with the schools, which represents over 60% of the total city budget at the end of April. The school committee unanimously passed a very tough budget for next year, which will require laying off up to 13 educator positions and leaving unfilled four vacancies created by mid-year retirements or resignations. So what that means is that next year's budget will will have 17 fewer pairs of boots on the ground in our schools in September than we do right now to meet our most urgent needs in the middle school. Approximately 13 positions will be transferred from other Melrose School buildings into M-V-M-M-S. This will lead to higher class sizes, which could go up to as many as 28 students per teacher, especially at the Winthrop Lincoln and Hoover Elementary Schools. And at Melrose High School, the superintendent has also identified 26 additional positions needed in our school district that will not be added into the budget. These positions include classroom teachers at Melrose High School, special education teachers and paraprofessionals across the district, paraprofessionals in our kindergarten classrooms, additional substitutes and an educator to support students who are learning English. So in some with a budget passed by the school committee from staffing alone, Melrose Public Schools will start next year with 40 fewer teachers and staff than has been identified as needed to deliver in that district. And that's not even beginning to address the impact of other cuts like the elimination of capital funding to repair and replace student Chromebooks and school department technology, which I'll discuss more in a few minutes.

▶ 21:18 Speaker 7: The needs going unfunded,

▶ 21:19 Jen Grigoraitis: unfunded will have a profound impact on the education of our students. We have done everything possible to ensure that the school budget does as much as it can within our limited means, but it should be clear to all of us that the cuts, transfers and unfilled positions will not produce the best possible education experience for our students. On the city side, we prioritized maintaining existing staff and services, which was challenging to do after addressing all of our increased costs, some items of note in the city budget, we will not be filling key positions that are either currently funded off budget with grants or are currently unfilled, which includes the sustainability manager, the economic development director, and the social services coordinator. These are external facing positions that worked with our residents and our local businesses, arts and nonprofit communities that brought in grant money to the city and played a critical role in moving forward Our work on climate resiliency and growth in our business community, we have eliminated the IT capital budget. This means that all IT capital needs, whether it's replacing Chromebooks, improving wifi, or increasing cybersecurity for the resident data we hold on, our systems will need to be funded through one-time revenue, which is also known as free cash. Our recreation department will be exclusively fee-based with no city operating support. This means that all rec programming will be completely reliant on the user fees paid by residents. Our health department, veteran services department and council and aging will all see budget decreases. We have eliminated the community events budget and shifted the Messina Fund for Arts and Culture to one-time additional revenue, also known as free cash. We have reduced the overtime budgets for police, fire and DPW each by 5% and I have frozen all non-Union staff compensation increases, which is just over 60 positions across the city, which includes department heads as well as administrative folks At FY 24 levels, they will see no compensation increases. In other words, the places where we are putting in cuts are the only places we can and they're the places that often provide direct engagement with residents. In my assessment and office so far, taking an in-depth look at all of this and seeing the price and cost pressures we are all facing across the board, it is clear to me that the city departments are just a few years behind the very hard decisions the schools are currently facing. So for now, we are going to regrettably cut the places we can, human services, community events, as well as covering more positions with fees. On the city side. Our department increases are being driven by mandated costs, utilities, transportation, contractually obligated salaries and benefits, public safety requirements, debt and pension obligations and costs like out of district placements, school transportation, Essex, agricultural, vocational and charter school, tuitions and pine banks, capital needs that are not determined by the city. These are not good choices. They are choices we are making so that we don't have to lay off more staff or cut mandated services. And I know this means that we are cutting some of the very things that people love most about Melrose. So what are we not doing in FY 25? Without additional revenue, we cannot ensure sufficient funding to enable the city to retain and attract public safety personnel. We are currently in contract negotiations with two of these unions and should be in with the third shortly. What we have learned is that our pay for our public safety employees has fallen below market in recent years relative to many of our neighboring comparable communities, which is making it very difficult to attract and retain qualified personnel. Additionally, in recent years, competition has increased greatly among public safety civil service departments in the state with far fewer candidates being interested in these positions than in years prior. Let's take the fire department for example. In 2019, we had seven firefighter paramedics return applications for employment with Melrose. In the spring of 2024, we had two and one re one. Applicant accepted employment with Winchester before even moving through our process for over a year, we have had 11 vacancies in the fire department and those vacancies have had all sorts of serious consequences. We've held fire personnel over sometimes for 72 hours working multiple shifts to cover vacancies. We've seen an increase in our overtime costs in the past year as we pay to cover staffing shortages on most shifts in order to best maintain services to the community. And in some extreme circumstances, we've enacted rolling closures at fire stations and taken the ambulance out of service at various times when we haven't been able to staff it. And the ambulance is a source of revenue that helps us to fund salaries of multiple firefighters. So when those revenues go down, our budget is further at risk. Not only that, but private ambulances have become overburdened with call volume and have been increasingly less reliable with their own staffing challenge in recent years. We need to adequately fund these contracts, not just because it is the right thing to do, which it is, but because continuing to pay well below our neighbors has significant consequences on the delivery of service and the ability of the city to keep qualified personnel in these departments. But to pay for them, we either need to have sufficient funding on hand or we will be forced to further reduce costs and likely headcount in order to meet our contractual obligations. What else are we not doing? We are not preparing for capital needs. Currently the city budgets $120,000 a year for capital maintenance for all 20 of our municipal buildings. That number has remained frozen for five years. So when we have one of those days where it's rainy and it's windy and the roof leaks in the Milano Center, the middle school gym, the Franklin School, the Winthrop School, city hall, and the high school, we are in the position of deferring all but the most critical repairs until we have one time revenue, also known as free cash. There is nothing nimble or proactive about this approach to capital maintenance and I think our students, residents and employees feel the impact we are not preparing for. It needs it for the city and schools are housed in the city budget and account for a whopping 1% of our total budget. This is for a department that touches everything we do to save costs. Next year. We have eliminated the IT capital budget. What does this mean? Well, in 2020, the city spent approximately a million dollars on devices, Chromebooks and laptops for every city and school staff and every Melrose Public School student. Those devices are now four years old and our only plan for replacement will be to come from one-time revenue in future years. We also have no budget for digitizing documents, increasing cybersecurity measures, or moving more permitting processes online to increase safety efficiency and ease for residents. We are not investing in climate resiliency and mitigation. Climate change and shifting weather trends are well-identified problems and we know that they're only going to get worse each year. We have storms that destroy that cause damage and sometimes destroys trees, flood our roads and public spaces and cause significant private property damage. And we need to start budgeting in a way that anticipates these costs and needs. We need a line item to replace trees. We need a line item for drainage project planning and implementation as we continue to deal with storm watered hazards and the increasing frequency of localized flooding events. We need a line item to buy and maintain equipment to clean out blocked or overflowing storm drains. We need a line item to maintain public EV charging infrastructure. These are things that right now we only get to do when we have, you guessed it. One-time revenue known as free cash and we are not ensuring sufficient free cash in future years in order to close the existing school budget deficit. In end our reliance on one-time funds to balance the budget, we have budgeted 85% of local receipts for FY 25, which is up from our typical budget of 70% of local receipts. This means that without additional revenue, we anticipate a 50% reduction in free cash for FY 26 going from our approximately three to 5 million a year to approximately 1.5 to 2.5 million in addition to being the sole source of funding for all of our capital. And it needs that I just mentioned. We also use free cash to close any funding shortfalls in our snow and ice budget and to address any excess need in overtime for police, fire and DPW. So what are we doing instead? We are robbing Peter to pay Paul. To give just one more example. We are short a public health nurse who among other important work provides coverage when our school nurses need to be out of the building. When we need to ensure sufficient coverage in the schools to meet staffing mandates. What we do is cancel blood pressure checks at the senior center and get rid of all those appointments so that that nurse can go and fill that need. We take from one department and one group of residents to meet the equally important needs of another department and group of residents. In short, we are one city government and cuts in one area impact the entire system. And while Melrose is a very special community, we are not unique. Communities across the state are experiencing the same challenges, rising costs, the sun setting of additional covid funds, increasingly complex student needs and are looking at budget cuts for FY 25, especially on the school side. Here are some of the communities that are in this position. Stoneham, Andover, north Redding, Redding, Arlington, north Andover, Belmont, Acton, Braintree, Dedham, Hanover, Hingham, Harvard, Westford, Milles, north Hampton, Gloucester, east Hampton, Boston, Brookline, Wilburn, Worcester, Lennox, Lowell, Milton, Medford, Framingham, Marblehead, Westport, Eastham, Amherst, Pepperell, Townsend Swamp, Scott Pittsfield, Brockton Franklin, bill Ricka, and Winthrop.

▶ 30:57 Speaker 8: That's a lot. So now for the plan,

▶ 30:59 Jen Grigoraitis: because there is a choice for you all and the community to make. In order for us to sustainably provide the level of services this community needs and deserves, we need a greater and more predictable source of revenue and that option is available to us under proposition two and a half. It is an option that Melrose has used once in 30 years. There was a successful override in 2019, which provided critical funding to our school district. And I for one, am grateful to residents who made that investment. Prior to that, there had not been a successful override since 1993, which is also the only time the city has sought additional funds for city services. Just by way of reference, I was a sophomore in high school in 1993. Next school year, I will be the parent of a sophomore in high school. This community must and should be passing regular overrides on a schedule that is clear and predictable. An override on June 18th provides the public with the ability to tell us what they want to see in our community for next year before we get there, before we make cuts again. I know that everyone in this room and in city hall and the schools will deliver the very best they can next year based on the budget they have to work with. But we need the public to tell us what they want that budget to be to tell us what they value. In my four months in office, I have had the great opportunity to work alongside a trio of financial experts, our former CFO, Patrick LaRusso, our interim CFO, Ellen Donahue, and our incoming CFO Kerry Golden. Collectively, they bring over 80 years of experience in state and municipal finance. They have managed through recessions, mid-year budget cuts, layoffs, furloughs, global pandemics, and periods of high inflation. Each of them believes that an operational override is the most prudent course of action for our community. We have scrubbed every cost center, reviewed every account, and budgeted as conservatively as we can. There is no magic bullet for continuing to deliver the same level of services with an annual increase of 2.5% when so many of our mandatory costs are going up at far faster rates. Should an override question be approved for the ballot by the council and approved by the voters of Melrose, the additional revenue will be used to fund two major things. 4.2 million to the Melrose Public Schools for teaching and learning personnel services and materials to support all students and meet growing enrollment and increased student needs as outlined by interim Superintendent ERO and the school committee during the budget process. 3.5 million to the city for public safety collective bargaining agreements for our first responders, police and fire salary and wages for currently unfunded or underfunded positions including economic development, sustainability, council on aging recreation library, public health and public safety, mandatory benefits for new city and school positions, compensation adjustments and vital investments in budget lines for overtime, capital maintenance, it needs, and climate resiliency measures. I know there are questions, concerns, and ideas. I welcome them all in the coming days and weeks. The council's budget review and approval process is a great opportunity for you and for members of the public to raise your questions and discuss these proposals in our democratic form of local government. The discussions and conversations we have now are nearly as important as the final decisions we make for our community. This discourse is essential and my door phone and email are open to everyone. As this process begins. I recognize that an ask to increase taxes, especially when everyone is feeling the impacts of rising cost, is not an easy one. That is why we also have a request to the council to expand the senior tax work off program to the state maximum of $2,000 from where it currently sits at $1,000. This increase would enable any Melrose property owner over age 60 to participate in the program and receive up to $2,000 off their property tax bill. We will also continue to publicize the additional tax exemption options for qualifying seniors and veterans. I look forward to discussing these programs and our options to increase the relief they can offer at a future council committee meeting. I am so honored to have the chance to lead this incredible city and to get to do so in partnership with all of you. Melrose has a choice to make. We can continue to close our budget gaps and deficits on the backs of our students and our employees, or we can do something hard and try to make a change in where we want this community to go. And I hope this plan will move us forward in that direction. Thank you.