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Lawmakers Probe 7 Budget Mysteries

by Thomas MacMillan | Mar 13, 2014 3:08 pm

(17) Comments | Commenting has been closed | E-mail the Author

Posted to: City Hall, City Budget

Thomas MacMIllan Photo Why does the budget assume an extra $2 million from the state? Why isn’t the Livable City Initiative expected to collect a single penny in fines? And what’s this about short-term borrowing for cash-flow purposes?

Those questions emerged Wednesday evening in City Hall’s Aldermanic Chamber, where the Board of Alders’ Finance Committee met to discuss the mayor’s proposed $511 million city budget for the fiscal year starting July 1.

It was the first chance for lawmakers to grill the administration on the budget as they try to whittle away at the proposal to lessen or eliminate a 3.8 percent tax hike by the time of a final vote at the end of May.

Wednesday’s meeting was not a public hearing, but a briefing by budget chief Joe Clerkin and city Controller Daryl Jones. During questioning they took down a laundry list of questions and requests for more information from alders.

Clerkin and Jones promised to supply all the information alders asked for, include about the following newly raised mysteries:

1. The $2 Million Assumption

On the revenue side, the budget includes an expected $2 million from the state, above a $3 million increase already included in the governor’s proposed budget.

Clerkin (pictured) said the extra $2 million is expected to come through action by the state legislature.

East Shore Alder Al Paolillo seized on that assumption as a possible danger: “If we don’t get that $2 million, you’re not on balance anymore. We are creating holes from the get-go.” Paolillo asked Clerkin to come back with an explanation for the assumption, a justification of why it’s a reasonable expectation.

2. Giving Up On LCI?

East Rock Alder Jessica Holmes jumped on another line of the revenue budget: “LCI (Livable City Initiative) Ticket Collections.” In the current fiscal year’s budget, that line reads, “$50,000.” In next year’s proposed: “ - “.

“Is the mayor giving up in the idea that LCI issue any tickets?” Holmes asked.

LCI enforces city housing and property standards. It can issue fines if landlords violate the city’s anti-blight laws. Historically, however, the agency has had a hard time collecting on those fines due to a lack of manpower.

Clerkin promised to get back to Holmes with more information. He said it may be that LCI ticket collection has been folded into another line item. If that’s the case, he said, he can separate it out for alders.

3. Short-Term Borrowing?

 

Included in the proposed budget is an appropriating ordinance that would allow for “short term borrowing for cash flow purposes if needed.”

Asked about this after the meeting, Controller Jones said that the measure is designed to even out the city’s cash flow. State aid comes at certain times of the year, and city bills can come at other times, he said. In order to ensure that the bills get paid on time, the city may want to borrow some quick cash.

“Lots of places do it,” Jones said. The city itself already does it in the capital budget. “We want to do it for the general fund, to keep cash flow even.”

Jones said cash-flow borrowing could lead to very short-term debts of maybe a month. Such brief obligations would mean negligible extra costs for interest payments, he said.

4. Leasing Trucks?

“Have we looked into leasing public works trucks?” asked Board of Alders President Jorge Perez of the Hill. The city has an aging and deteriorated fleet of trucks on the roads.

Controlled Jones said he’s looking into it. Leasing can be a good option because it “takes pressure off” the capital budget and you “have brand new stuff every three or four years.”

“I think it’s a great idea,” Jones said.

Perez also asked the administration to look into the possibility of including private maintenance as part of a lease deal. He stressed that he was not advocating for that option, only requesting information.

5. $100 Million Extra?

Prospect Hill/Newhallville Alder Mike Stratton (pictured) grilled Clerkin on details of the city’s education spending, drawing support from his colleagues for his general spirit of inquiry, but censure for what they called his “sensationalizing” methods.

Stratton, a trial lawyer, cross-examined Clerkin about the “minimum budget requirement” (MBR), the amount that the city has to spend on schools in order to secure state education funding. Stratton said the city has been spending, by his calculations, $100 million that hasn’t been counted toward the MBR. That’s extra money the city doesn’t need to be spending, he said. Stratton said the education budget could be cut by at least $35 million; he didn’t specify how.

The $100 million takes the form of health care and pension expenses for Board of Ed staff and faculty, as well as debt service the city pays for school construction bonding, Stratton said. Those expenses are folded into totals listed on page 2-47 of the proposed city budget, under the heading “CITY TOTAL (Non-Education),” Stratton pointed out.

“Just for the record,” Perez said, “we do note how much” medical, pension and debt service goes to the Board of Ed. It’s listed in the Board of Ed’s budget, on page 19 of the current fiscal year’s spending plan.

Stratton said that, by his calculations, if you add in the extra $100 million, the city is paying $29,000 per student. Those kids could all be sent to private school for that much money, he said. “And get a BMW when they turn 16.”

New Haven pays far more on education than comparable towns, and is paying far more than the required MBR, Stratton said.

“We can’t actually take what you’re saying for granted,” Holmes said; “$29,000 per pupil is basically an imaginary number.” The city should look at how it’s allocating it’s MBR, she said. But throwing around numbers and “sensationalizing” the issue isn’t helpful, she said.

“It’s not sensationalized,” Stratton said.

“The BMW is not sensationalized?” Holmes said.

“If my numbers are wrong, then I have sensationalized,” Stratton said.

“As an accountant, the idea of somehow having $100 million disappear somewhere doesn’t jibe,” Clerkin said.

“I hope I’m crazy,” Stratton said.

Clerkin said it’s worth looking at Stratton’s basic MBR question but “there’s no $100 million floating in the system. That’s not the reality of it.”

“We can’t take $100 million out of the budget in one year and not cause a huge problem,” Stratton said. “We could take $35 million out.”

Stratton was asked by email Thursday if he had a breakdown of those $35 million in cuts. He responded that the Board of Ed’s budget “is not transparent so being exact is not easy. But looking at the site based budget, and Meadow Street central offices, there appears to be enormous amounts spent on administration rather than direct student services. The amount spent on admin appears to be well in excess of the norm for well rub public systems and charter school systems. ... My recommendation will be that we cut the cost of administration down to no more than 15 percent of the total operating budget for education. This should save at least $35m without impacting direct services. The trick is ensuring they do not decide instead to cut paraprofessionals and programming. The way we do this is indicate that the city will cut 35m if the cuts are targeted to admin as set out by the alders. If the [Board of Ed] refuses to agree to these cuts, we then do a much larger cut of 50m.”

6. Ready For “Pay-As-You-Go”?

Alder Paolillo asked about the city’s plan to start a “pay-as-you-go” fund for purchases that would otherwise be bonded out. The proposed budget includes $500,000 toward that fund.

Controller Jones said it’s part of an effort to rein in debt service expenses and to address the city’s lowered bond rating, which has a taken a hit as rating agencies look at the city’s debt obligations and its lack of cash on hand.

“I’ve reviewed their comments,” Jones said of the rating agencies. The pay-as-you-go plan is meant to improve the rating, he said.

“Folks that generally implement pay-as-you-go tend to have a strong balance sheet,” said Paolillo. The city does not have such a strong balance sheet, he noted. He asked Jones and Clerkin to come back with a strong justification for the proposed plan.

7. More Mayor Money?

After railing against what he called bloated education spending, Stratton ended the evening on a contrasting note.

“The mayor’s salary is way too low,” he said. The mayor makes $131,000 per year. “That doesn’t seem appropriate.”

Stratton has come out in strong opposition to the mayor’s proposed $435,064 — or 48 percent — increase in her office’s budget, to create a new grant-writing operation.

Stratton said CEOs of major companies in town make far more than $131,000 per year: “It should be $350,000, $400,000.”

“You’d get more people running for mayor,” cracked Perez, who himself weighed a run in 2013. “Now you’re talking!”

“We had a perfectly good pool last year,” Stratton said.

At any rate, the mayor’s salary can’t be changed until the end of a term; a salary change can’t be approved by a sitting mayor. “We can’t touch that for another year and a half,” Perez said.

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posted by: TheMadcap on March 13, 2014  3:34pm

The mayor’s salary is perfectly reasonable for a small city. She’s the mayor, a public official, not the CEO of a private company. For comparison, here are the mayoral salaries in other cities(some of these might have changed in the past few years)

Boston: $175,000
NYC: $225,000
Albany: $136,000
Portland: $120,000
Providence: $125,000(reduced to 112k by voluntary pay cut)

posted by: Esbey on March 13, 2014  3:47pm

Useful but sensationalized seems a pretty good description of Mike Stratton’s efforts on the budget.  I am assuming that he is reading the budget wrong when he concludes that we are spending $29,000 per kid (he admits that possibility himself), but it is a bit disturbing that no one present quickly knew how to rebut him.  To be super fair, private schools don’t typically deal with special needs children, so one has to adjust for that. 

The idea that the district spends too much on administration is extremely plausible.  It would be good to see careful benchmarks against other districts of similar size.

posted by: Jones Gore on March 13, 2014  4:17pm

One thing I an say about Stratton is that he knows how to get your attention. We need more of that.

posted by: wendy1 on March 13, 2014  4:19pm

Peoples Caucus meeting Sat March 15 at 2pm I understand @cityhall.

I like Mike and will listen to any new ideas to save the city.  I agree with Madcap by the way on salaries.  When you consider all of Toni’s percs, she’s getting way more than $131,000.

posted by: Atticus Shrugged on March 13, 2014  5:07pm

The $100 million comments are misleading.  Obviously, the way the City’s money is spent paying for educating students may not be the best.  However, those numbers were largely set in stone by the former administration who negotiated the union contracts for 20 years and who built massive and beautiful new schools that now need to be maintained.  Many of the Alders know this because they approved the school projects and the union contracts.  The remainder are acting as though there is a legitimate choice right now short of not funding a contractual obligation, which would lower our bond ratings.

Leasing trucks would only work or save money if the city worker’s used them sparingly.  Trust me, companies that lease trucks aren’t losing money.  That means the city would lose substantially over time if it decided to lease the majority of its fleet.  Leasing should be a small part of the solution, but not the solution. 

Okay, I don’t want to beat the dead horse, but I really can’t help but feel that MStratton is trying to set himself up to run for mayor.  I know, big time lawyer, very successful, very smart and doesn’t need any of this.  However, it would be “easier” for him to take the cut from practicing law for a bit if the Mayor’s salary was, well, $350,000.  The cynic in me can’t help but wonder whether he would run if the salary were increased.  And that is not on MStratton, that’s on me.

posted by: robn on March 13, 2014  5:48pm

It IS sensationalizing to say that spending $29k per student could put a child in private school and buy them a BMW when they turn 16.

The reality is that for $29K/yr, you could send them to a private school and buy them a BMW in the 3rd grade

posted by: ohnonotagain on March 13, 2014  6:32pm

Well it seems that Alder Paolillo is trying to help the taxpayers? Maybe he finally gets it that we are all hurting? Many of his constituents have said if he owned his own home and had to pay those type of taxes he may actually care more. Living with his parents all these years has not helped his perspective on budgetary matters. Glad to see him come back to life a little after a dormant stage that has lasted a bit too long. More time will tell.
As far as Stratton’s thinking the mayor is not paid enough? If the mayor was evaluated right now by the taxpayers for her performance, I am pretty sure money would be taken away from her salary. He should stay focused on decreasing her budget in general for her office and other matters. Ridiculous spending while the taxpayers continue to tighten their belts.
OK, enough said, just getting fed up with all this shenanigans and budgetary spending.

posted by: 14yearsinNHandgone on March 13, 2014  6:56pm

Mike Stratton, you just lost a huge amount of credibility.

You can’t claim in one breath that you’re not sensationalizing, and then state in the next that New Haven should pay the Mayor $300,000 to $400,000 dollars.

That’s twice what the governor of the state makes.  It’s a ridiculous claim that makes you look like a buffoon.  I’ve never heard such a ridiculous claim in my life.  If you’re serious about that, people should stop listening to you.  If you’re not, then you’re being sensationalist.  Lose-lose.

posted by: alexey on March 13, 2014  7:26pm

Trying to figure out cost per student would be an interesting and rigorous exercise to include all local, state, federal costs and obligations, averaged over some number of students and years to incorporate all continuing, capital and pension expenditures.  That said, the following independent schools have set minimum day tuition, typically not including books and some other fees…

Choate Rosemary Hall $40,840
Hopkins $37,550
Cheshire Academy $34,900

These institutions have competitive admissions and are not required to provide services to anyone.

They will also tell you that the cost per student would be higher without fundraising and endowment income,  probably on the order of $50,000 per student.  Their teachers generally are not as well recompensed as public school teachers.  They bear the costs of paying all of their continuing and capital expenses and offering smaller classes and full athletic programs.  Financial aid, while available, is limited.

posted by: Noteworthy on March 13, 2014  8:02pm

Why does Daryl and his other brother Daryl come to an important meeting unprepared? These are major line items, major assumptions - to have to say “I’ll get back to you” is disrespectful and it shows a lack of preparation. Can you image a CFO of even a medium size business sitting down with his board and saying “I’ll get back to you?”

posted by: jim1 on March 13, 2014  8:59pm

OK Lets pay the mayor $400,000 a year and she could give it to her son to help pay some back taxes.
At that rate I would run..

posted by: WC10 on March 14, 2014  8:40am

Jessica Holmes is the hero of this article with both astute observations and witty retorts.

posted by: robn on March 14, 2014  9:00am

ALEXEY,

Way to refute Stratton’s point by selecting three of the most expensive prep schools in the country. The fact is, there are 107 private schools in New Haven County alone; many more affordable than what you noted. Right up the street is Sacred Heart which costs just north of $12K/yr.

posted by: Bumpercar on March 15, 2014  7:45am

“You can cut $35 million.”
“Where?”
“I don’t know, you just can.”

Ha! What great comedy!

posted by: mstratton on March 15, 2014  7:55pm

Just to clarify my comments here. First, this city is not used to questioning
The status quo. The budget hearings are a time in my mind where we should be doing exactly that.  Many people do not realize how little control city government or residents have over education.  We have no capacity to make the boe institute sports, after school, or arts programming. We also lose control over any local contribution we give to them. My comments were accurate in that we do contribute 90-100m more than state law requires or similar cities do. This is very significant because it means we lose control over one third of our budget. Education is at 400m. The city has only 200m.
If we shifted 100m back to the city we would have 300m and so would education. With that shift we would be in line with other similar cities and we could do amazing things to help families and kids. 100m allows is to fund a comprehensive rec program for youth. Each kid would have one sport, one art and one instrument. That’s a 12m expense. We could also have 3 cops assigned to each ward. Community policing 4-11 every day. Cost 8m. We could also get city employees to but in city with a 5000 prop tax rebate 3m for 500 homes. We could also have a wpa program for adults and youth. Building the city while employing 2000 residents-15m. We could also beautify our city with neighborhood grants 3m. We could then stop a tax increase and cut taxes by 20 percent. Cost 60m.  So when we think outside the box we start to dream big. The reality is we have a great city that has always thrived when it acted boldly and without fear. We are working hard to identify ways to tame the education beast. Right now we pay the most per pupil and have the worst results. Obviously new approach is needed. Keeping kids safe and engaged. Keeping parents employed and getting more middle class in city do so much more than huge giveaways to an unaccountable boe.  Btw my per pupil number is wrong. I apologize. It is 23,500 per pupil.

posted by: Claudia Herrera on March 16, 2014  8:29am

Why isn’t the Livable City Initiative expected to collect a single penny in fines?
This is the GOLD question. 100% agreed with Jorge Perez and Jessica Holmes.

What is it? there is a policy or law locking them to enforce the law? they don’t have a collection department? Enforcing the law also means to collect fines. I truthfully believe that this action will make a great contribution to improve the quality of life and crime in many area of New Haven.

In my area of Fair Haven we work close with LCI department but is NO much what few residents can do if so many other are not resalable of the mess they have in their properties. Constantly talking to these homeowners, and corporations just create wasting of time (payed for us) with short time results. Until these careless people understand that their pockets will be affect they may be more careful and eventually they will take care off their duties.

I will volunteer to help Jessica and Gorge to make these a reality by evolving our communities voices and together sent a clear message to the LCI department. Please, Spring is almost here and summer as follow with all the crazy “stuff”.

posted by: Citydude on March 17, 2014  9:28pm

As a south of the border implant in NH, I thought that the politics in my country of origin were shady, but after being here for 4 years, I realized that politics here are just as shady, but in English. We are obviously living above our means, but not because we don’t have money, it’s because it’s so badly mismanaged that it leaks worse than water coming from a 100 year old pipe. I’m running around the idea that parking ticket prices should rIse. An empty meter in NYC will cost you $75, $35 in Bridgeport and $20 in New Haven. Let’s make money out of bad drivers and stop being so complacent with people that did no read a driving manual before getting their drivers license, especially city employees and off duty cops. Why is it that a food delivery guy making $10 an hour driving their own car has to put money in the meter, but then City and state representatives get a free pass. I’m sure these cheap individuals can put 4 quarters in the meters!

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