OPINION: A Critical Take On Where the City of Framingham is Headed Financially in 2022

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By Geoffrey Epstein

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FRAMINGHAM – When the new Mayor, City Council and School Committee were sworn in on January 1, 2022, we all knew they were facing likely the most extensive raft of problems to be found in any municipality in the Commonwealth.

The expectation was that after four years of divisiveness, we would finally have a governmental team which would work together to find innovative solutions to those problems. It is clear by now that we do indeed have a much more collaborative and cordial government, so voters should be pleased on that score. However, so far, initial moves on the problem-solving front are very concerning.

We appear to be going down the wrong path on fixing pandemic damage to education, school roof replacements, climate change action and water & sewer maintenance funding. There are clear solutions, but they require a sea change in the city approach to property tax revenue, infrastructure maintenance,
the city bond rating and debt service. And above all the city must reverse its unprecedented diversion of
Chapter 70 state aid from the schools.

Financial background

One of the major impediments to the suggested solutions that follow is the city approach to its bond
rating, debt service and pension liability. The city is reluctant to expand debt service and has no appetite
for moving the pension liability pay down date from 2030 to 2040, as Brookline did when it needed to
fund major capital projects at short notice. If we followed the Brookline approach, we would free up
about $10 million in annual recurring funds for capital projects.

The city bond rating is Aa2, two notches below AAA. Municipal bond interest rates have hovered around
2% for the last two years, after being around 3-4% for the prior 6 years, and the difference in rate for
AAA versus Aa2 is only about 0.5%. So, interest rates are historically low, as any homeowner knows.
That means we should not be afraid of floating bonds to fuel the capital investments we need in the
immediate future. With interest rates rising, if we defer projects, the cost of future bond issues may well
be much greater than any difference amongst current bond ratings, and project costs will certainly be
substantially greater. Fear of a city bond rating downgrade has driven some very bad decision making in
the past, including not drawing a dime out of our rainy-day reserve fund during the pandemic, and
constantly deferring capital projects. It seems much more prudent financially to rapidly move ahead
with as many projects as possible to minimize bonding and construction costs.

Back to the problems

On the education front, the city plans to shift $4.4 million of state Chapter 70 aid – essential for the
repair of pandemic induced educational damage to our low income, special needs and English learner
kids – to fix a few school roofs. This not only expands the prior administration’s practice of raiding the
school district operating budget to fund capital projects (Blocks roof: $490,000 in 2019; Water & Sewer:
$411,000 in 2021) but it is, without a doubt, the biggest step backwards on equity, in recorded Framingham history.

While the pandemic has had a major impact on city revenue, it has been devastating for low-income
families. They have suffered the worst job losses, health outcomes and educational damage of any
group in Framingham. Further, when education went remote, these low-income families typically had
much worse internet connections and computer experience, plus all the classroom support for their children simply fell away. More specifically, their ESL (English as a Second Language) and special needs
aide support vanished or was greatly diminished.

When these students returned to classes, a new problem arose. The ESL and special needs aide support
did not return in full measure to help remediate their substantial educational damage. Many ESL and
special needs aides simply left the profession. In the current school year, there are more than one
hundred ESL and special needs aide positions unfilled. That in turn has made life much tougher for
classroom teachers, who relied on that support to make their classes manageable.

And there is no plan to fix this. This must be the most important undiscussed problem in the city!
Not only is the job market for aides hard to hire in, but the city has no plans to boost pay for these
critical staff to address that problem, nor factor in the real effects of inflation which is making matters
even worse. The city administration still thinks that inflation protection for staff at 2% is good enough,
when inflation over the last 12 months was 8.5%. As further evidence of the magnitude of the work
force problem, staff retirements at the end of the current year are projected to be at least 50% higher
than last year.

The remarkable thing is that the state has handed us exactly the tools to fix this problem. Chapter 70
state aid for the schools was increased by $11.8 million this year, boosted by the Student Opportunity
Act (SOA), and is designed to improve student achievement for low income, special needs and English
learner students. This is where the city has lopped off $4.4 million to fix roofs rather than students.
The state strategy for Chapter 70 aid and specifically the SOA is explained at:
https://www.doe.mass.edu/soa/

The $4.4 million diverted from education needs to be returned to the school district FY23 budget and
used to address the work force erosion which is damaging our most needy students.

On the school roof front, just 3 roofs are slated for replacement by the end of 2023, when we have 14
school roofs at or near their end of life and deferring 11 of those replacements not only guarantees they
will be much more expensive but makes it certain that solar roof installations will not be done for those
11 roofs, as the federal solar credits, which make those financially viable, terminate at the end of 2023.
The most powerful approach to reducing the carbon footprint of Framingham is being largely jettisoned.
How does that comport with our duty to protect our children and grandchildren from the future horrors
of irreversible climate change? Not to mention the social justice or equity end of things, where low-
income folks always fare worst. We have a very tight time frame, so we must get moving and we must
expand debt service.

On the water and sewer front, we are still struggling with a problem which was created by deliberate
neglect of that infrastructure several decades ago. Over the years, we have completed at least $250
million in capital projects to address the problem, but the attempt to fund the debt service by raising
water and sewer rates has led to huge increases in fees borne by residents and local businesses. Another 16% increase is planned.

An overarching reason for this fiscal mess is the fact that Framingham started taxing below the levy limit
in 2012 and amplified that in the last 4 years, so that the annual tax levy increase went to zero and
stalled growth of the property tax revenue base. If we had taxed to the levy limit, we would have an additional $37 million in the FY23 budget, which would solve all our problems. That unused $37 million
is called excess capacity.

Framingham has the fastest rising excess capacity in the Commonwealth, rising from 335th out of 351 in 2012, to 6th right now. And we don’t have the strong commercial base that Cambridge (#1) has, or the casino Everett (#2) has. It is critical that we get back to 2.5% annual property tax levy increases, which would appear to have strong support in the community, which voted YES on the Fuller debt exclusion and on the CPA and has seen large annual increases, averaging $20,000 to $30,000, in their home values over the last 6 years. Even there, the Residential Exemption could be deployed to afford more financial protection to low-income homeowners.

That way large capital projects can be funded with tax increases (like Fuller) not fee increases. The net
result is that costs for residents would be lowered, as they can deduct property taxes on their annual tax
returns, but not water and sewer fees, and local businesses would be given a large boost in their ability
to compete with businesses in surrounding towns and cities. Win-win. And this especially helps lower
income homeowners. Big win for equity as well.

So, will the city restore $4.4 million in Chapter 70 funds to the schools, to rescue our neediest students
from educational misery? Will our school system work force erosion be addressed? Will the city float the
bonds needed to rapidly replace 14 school roofs before they fall apart? Will the city complete the 27
solar installations at the schools (14 solar roofs, 13 solar parking lots) before the federal incentives
expire at the end of 2023? Will our water & sewer rates get back to normal any time soon?

Will the city get out of its Catch 22 thinking, where it has a good bond rating, so it can borrow at very low cost, but it won’t borrow because it is afraid that might downgrade its bond rating?

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Geoffrey Epstein is a former District 6 School Committee member. He served from 2018-2021.

editor

email: editor@FraminghamSource.com call or text at 508-315-7176


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