5‑Year Plan Pitches 39 Fixes

City finance staffers and attorneys plan to take a larger role in helping the Board of Education cut down on legal, technology, and human resources costs, according to a newly published five-year financial plan.

Those proposed closer collaborations between the city and the Board of Education are three of the 39 cost-cutting and revenue-generating initiatives outlined in the new five-year plan, which Mayor Toni Harp and City Controller Darly Jones released on Monday afternoon at a City Hall press conference.

Harp and Jones said that the five-year plan, which finance staffers have been working on since late last year and which the alders had ordered the mayor to complete by July 1, includes dozens of initiatives that, if implemented, should help the city realize $76.3 million in savings and earnings by 2024.

Click here to read the full document.

Harp worked with her staffers and alder leadership to craft this document, she said, ​“to guard against the potential for future volatility and to prepare for the potential financial challenges every Connecticut city faces.”

Jones explained that the plan does not guess at how the city’s current $556.6 million operating budget and 42.98 mill rate might change at a line-item by line-item level over the coming half-decade. Putting out projections at that level of detail for such a complicated document, he said, would be irresponsible and inevitably inaccurate.

Rather, the five-year plan assesses the city budget’s current fiscal health, identifies the key drivers for both revenues and expenditures, and then describes in varying levels of detail how the 39 budget initiatives might work and how much they might save. Twenty-three of those initiatives, he said, are already in place.

“The Five-Year Plan is more than a financial fiscal plan,” the document itself reads, ​“it is a plan to enhance the City’s sustainability and competitiveness for years to come.”

“The intent of a multi-year financial projection process,” it continues, ​“is for the City to regularly update and adjust forecasts as assumptions, goals, and strategies change. As a result, this process will continue to remain in the forefront for the City’s planning and budget process.”

Mohit Agrawal, the chair of the city’s independent Financial Review and Audit Commission, applauded the city for publishing the long-in-the-works document. He said he needs more time to review the assumptions and projections behind the individual initiatives before commenting on specifics.

After a glance through the 31-page document, he did caution that many of the revenue and cost projections seem to have been made using median estimates: that is, assuming that the economy and state aid and pension returns and healthcare costs change at relatively predictable levels based off of recent history. The most responsible version of this document, he said, should also include a ​“sensitivity analysis,” which takes into account more extreme scenarios: if the economy tanks, if healthcare costs shoot through the roof.

“What if economic growth slows down?” he asked. ​“How does that affect the projections?”

Mayoral challenger Justin Elicker, one of a scattering of attendees at Monday’s presser, also expressed concern about the assumptions underlying the plan. In particular, he criticized the mayor for referring to last year’s budget as balanced, considering the hefty debt refinancing that reduced short-term debt service payments but increased the amount of debt owed decades down the line.

“If you take out a payday loan,” he said, ​“your finances may look balanced, but they’re anything but balanced.”

The document itself does assume that state aid stays flat over the coming five years, and that the local property tax rate doesn’t budge, and that the local economy continues to boom.

In that ​“median scenario,” the plan assumes that the city’s key revenue drivers, including real estate taxes, personal property taxes, motor vehicle taxes, state aid, voluntary payments, and building permits, will increase from $533.8 million per year to $558.4 million per year over the next five years.

In that same scenario, it estimates that the city’s key expenditure drivers, including city employee salaries, overtime, health benefits, pension contributions, debt service, and the Board of Education will increase from $517.6 million per year to $573.6 million per year.

“The projected increases from the key expenditures drivers will outpace the anticipated growth key revenue drivers,” the document reads, ​“producing potential budget gaps over the next 5 years. The City administration, as part of developing the annual fiscal budget process, will address potential gaps and create a balanced budget as required by March 1 of each fiscal year. As the way to address potential gaps, the initiatives in the following section will provide options for the decision makers.”

BOE Collaboration, Parking Ticket Clampdown

The final three budget initiatives described in the plan are all targeted at cutting costs at the Board of Education, which ended last fiscal year with a $5 million-plus deficit.

The first, called ​“Financial, Human Resources, operational Best Practices for BOE,” proposes that the city’s finance department will partner with the BOE to ​“create standards and ensure adherence to existing City policies. The City will assist the BOE in incorporating best practices, training and streamlining processes to achieve efficiencies and increase accountability and cost savings.”

The second, called ​“City Corporation Counsel and BOE Partnership,” proposes that a city staff attorney be assigned to the BOE to provide full-time, in-house legal advice. 

“That assignment will result in legal cost savings for the BOE instead of having to use outside counsel for legal matters currently budgeted at $450,000,” the document reads. ​“This will guarantee prompt, appropriate review of issues and cases presented, and the proper, timely assignment of matters.”

The last BOE-specific initiative calls for the city and the board to partner on addressing technology improvements for city schools. ​“City IT and BOE will collaborate to identify an action plan to bring the BOE up to a state of good repair. This will involve a collaboration with the City’s IT division, the BOE IT division, and the City’s IT consultant to review current plans for the schools and provide best practices to bring the BOE schools IT environment up to a state of good repair.”

None of these BOE initiatives comes with specific cost-saving and/or revenue-generating projections in the plan.

But plenty of the 36 other initiatives do.

One, called a ​“Parking Tickets Initiative,” projects that the city could realize up to $1 million per year in new revenue by going after outstanding parking tickets: ​“The City will develop a collection program to recover outstanding parking tickets, modeling it after the Police Extra Duty Payment Program, owed from vendors 2 years ago. The City will seek other legal options and collection mechanisms to collect the outstanding parking tickets. The City will also work with the local universities, rental companies, and businesses to ensure that outstanding parking fines are resolved.”

The city also anticipates adding $4.6 million to local coffers every year by undertaking a comprehensive review of local voluntary annual contributions from large tax-exempt entities like Yale University. ​“The City has engaged our community partners to reevaluate their voluntary payment agreements to the City. The City has begun the review of existing agreements that have remained unchanged for many years to identify those warranting revision.”

Redesigning the city’s Worker’s Compensation program, meanwhile, could save the city between $1 million and $2 million every year, the plan estimates. ​“The Worker’s Compensation Program is a self-funded program by the City with an estimated average cost of $8.6 million every fiscal year installed. Installed in the late fall of 2018, new software (Microsoft Power BI and Artificial Intelligence) is now allowing the City to analyze the
claims data of injuries of employees, including types of accidents, cost of claims, locations and other trends (weather, time of day). With this new granular data, the City has revamped the worker’s compensation program (beginning March 1, 2019) to address specific injuries that occur with our employees with specific safety programs.”

And a continually developing partnership with Yale New Haven Hospital to reduce city employee healthcare costs could save the city $6 million to $7 million every year. ​“The expected outcome from the partnership was to deliver a high quality, more affordable health care by reviewing the past experience (cost & types of claims) of the lives covered by the City and introducing proven programs to address high cost chronic diseases.”

Click here to watch a Facebook Live video of Monday afternoon’s presser.