Overtaxation with No Oversight: The Internal Service Fund

Since Mayor Murphy took office, the citizens of New Milford have been overtaxed to create discrete government piggy bank. The over-taxation has led to the bloating of the Internal Service Fund (ISF) by a whopping 170%. The ISF has grown 2.5 times higher than the town’s healthcare premiums. This overtaxing of citizens has continued to take place even after Murphy’s administration publicly agreed to proper management of the fund in 2008. It’s time for this fund to undergo a proper forensic audit so citizens can be assured their tax dollars are fully accounted for – and returned to them.

On February 8, 1993, the Town Council passed a resolution establishing the Medical Reserve Fund, which is now the Internal Service Fund. It is used specifically to keep track of medical insurance premiums coming in, and payments for medical claims going out. The money coming in is paid by employees and retirees of both the Town and the Board of Education. The ISF funds health insurance for a majority of town employees: police officers, clerical staff, teachers, administrators, etc.

Here’s what important about the 1993 Town Council resolution: it specifically states, “… making deposits into the fund reserve shall be to maintain the fund reserve balance at a level which stays between twenty percent and thirty percent of the total Annual Medical Expense Estimates.” To repeat: between twenty percent and thirty percent. Not below 20%, and not above 30%. Pretty clear, right?

The minimum of 20% was set up to cover extremely high medical costs not covered by a single year’s premiums. The 30% maximum limit was set up to prevent overtaxation and to ensure timely and proper oversight. Pretty clear, right?

Prior to Mayor Murphy’s administration, the last fiscal year for former Mayor Gambino was 2003/2004. According to the town’s annual financial audit for 2003/2004, the ISF had $2,629,570 in Total Net Assets. For that same year, the actual medical premiums were $7,786,144. The amount necessary to meet the 20% of premiums is $1,557,229. At this point, the ISF was overfunded by $1,072,341, or at a level of 33.8%. This is 3.8% higher than the maximum funding allowed.

Here’s a very important point: the funding level in 2003/2004 was enough to cover the 20% of premiums in 2008/2009 (the last year of audited data). Not one additional taxpayer dollar was necessary during the entire Murphy administration.

But the overfunding and overtaxation - with no oversight - were ready to explode.

The annual percentage of funding grew far above thirty percent upper limit. 2004/2005: 35.5%; 2005/2006: 49.6%; 2006/2007: 53.4%; 2007/2008: 56.3%; 2008/2009: 54.0%.

According to the audit reports for the Murphy administration, the ISF net assets have grown to $6,327,551. That’s a whopping $3,697,981 million more than Mayor Gambino. The ISF net assets grew by the following annual amounts: 2004/2005 - $607,115; 2005/2006 - $1,864,570; 2006/2007 - $454,861; 2007/2008 - $738,532; 2008/2009 - $32,903.

You could look at the last audited year (08/09) and think the town has finally made an effort to slow down the overfunding. However, nothing could be further from the truth. That year, the Murphy administration used $1,000,000 of ISF funds to offset budget expenses. So, instead of the fund dropping by $1 million, it actually grew slightly because overbudgeting pumped $1 million back into the ISF.

If you’re going to use $1 million to offset budget expenses, why overtax citizens by $1 million? What kind of oversight is taking place? Is there any oversight – or just overbudgeting and overtaxation?

What’s also amazing is how the growth of the ISF is much higher than the rise in the town’s health care premiums. From 2004 – 2009, premiums rose by 50%. But the ISF grew by 140%, and the overfunding of the ISF grew by 271%. What kind of oversight is there when an already overfunded account nearly triples healthcare premiums? Simply stunning.

Prior to 2008, had anyone paid attention to the ISF? The Mayor and Director of Finance never said a word about it – or the overfunding. However, once members of the Board of Education started asking questions about the millions in overfunding, action was “suddenly” taken. A short term accounting review was done (only covering two years of overfunding), and the Mayor decided to take the $1 million out of the fund. In the accounting review, there was a recommendation “that the Town periodically settle the interfund receivable and payable balances.” And, at the Board of Education meeting April 14, 2008, the Director of Finance said the BOE contributions for 2008/2009 looked good. But what has happened since?

• Despite the Director of Finance claiming the numbers looked good for 2008/2009, the ISF still grew by $1 million
• The Mayor used $1 million for budget expenses in 2008/2009
• The Interfund receivable and payable balances – in excess of $2.5 million - have not been resolved as of the last audit

It appears that when taxpayers look away from the ISF, nothing changes. Overtaxing and overbudgeting with no oversight remains the status quo.

Taxpayers and town employees need to demand the following:
• A forensic audit of the ISF dating back to fiscal year 2004/2005
• Accounting of funds contributed by employees, Town, and BOE
• Reconciliation with the health insurance consultant to ensure past practices will no longer be the norm
• A transparent process of health care budgeting

It’s time to expect Mayor Murphy to follow the 1993 Town Council Resolution. Taxpayers and town employees deserve oversight – not overtaxation.

HT Gives "Thumbs Up" to NM School Budget

Here are a few snippets from the 2/4/11 editorial in The Housatonic Times.

"...all those who assemble the proposed education budget went into the current process with new resolve to craft a package that met all the needs and would also be politically palatable. Better communication was established between the school board and Town Council and Board of Finance, concessions were secured from unions representing school district employees and more."

"The recently unveiled result is a $58,194,266 budget for the next fiscal year that carries a modest 2.19 percent increase in spending. Those numbers are more impressive when one considers a very significant and overdue change this budget would effect: the introduction of full-day kindergarten."

"This year, as the proposed education budget moves through the process of scrutiny and approval, officials and taxpayers must be mindful of the hard work that has been masterfully done by school administrators and the school board to craft a plan that meets the district's needs at a very fair price."

OK - let's review the key phrases:

• modest 2.19 percent increase
• hard work
• masterfully done
• a plan that meets the district's needs
• very fair price

Those aren't my words - they're 100% Housatonic Times.

Sorry to say, but this editorial is not posted on-line. You'll have to purchase the Housatonic Times to read it, but it's worth the $1!

G! E! T! S! (bud) GETS! (bud) GETS! (bud) GETS!

(Oh, was that too soon, Jets fans? Suck it up. Love, The Patriots Nation.)

Forget football, it’s budget season again!

And even though we paid all those pesky teachers last year, they want money again this year. So, of course, it will be controversial.

There are several things in play this year.

1. The school is (at this time) asking for a 2.3 percent increase over last year’s budget. Which has remained frozen for the last 2 years. So, it’s a 2% increase over the 2008-09 budget. This, no doubt, is giving plenty of non-school-supporters the vapors and the heebie-jeebies. (Just for comparison, Brookfield is asking for a 3.8% increase.)
2. The school and the town are theoretically working with a new spirit of cooperation and communication, thanks to the Ad Hoc committee’s work of the past few months.
3. The Town Council, in response to citizen requests, is considering streaming budget hearings online this year. (The BoE already does this). If this comes to pass, it will be a welcome improvement in transparency.

So. Let's take these points apart.

1. BoE Budget Hearings.

Here is the first budget hearing at the BoE:

http://www.theeventisonline.com/NewMilford/nmboe011811.html

The first 20 minutes or so is the Superintendent’s presentation. After that, principles from the 3 elementary schools, Sarah Noble, and SMS do a Q&A with board members. (The high school presented on 1/20; 1/25 will focus on maintenance, utilities, general admin, and capital; 1/26 will be when the BoE votes on the whole package). The presentation is, perhaps, the most important part for people who want an overview of what the school system is looking to accomplish.

The biggest change is the request for full-day kindergarten.

Let me preface my remarks by saying I have 0 future kindergartners in my household, nor am I a past, present, or future employee of the school system, so I have no personal stake in what I’m about to say.

Full-day kindergarten is a great, great, great idea.

Full-day kindergarten will cement the basic skills needed to excel in school. Reading, writing and ‘rithmatic of course, but other less testable skills, like sharing, working in groups, taking direction, and problem-solving, all get a workout in full-day kindergarten. This is critically important when one realizes that 43% of this year’s New Milford kindergartners did not attend preschool.

In fact, the value of a solid kindergarten program can be calculated in dollars.

http://www.nytimes.com/2010/07/28/business/economy/28leonhardt.html

“Students who had learned much more in kindergarten were more likely to go to college than students with otherwise similar backgrounds. Students who learned more were also less likely to become single parents. As adults, they were more likely to be saving for retirement. Perhaps most striking, they were earning more.

“All else equal, they were making about an extra $100 a year at age 27 for every percentile they had moved up the test-score distribution over the course of kindergarten. A student who went from average to the 60th percentile — a typical jump for a 5-year-old with a good teacher — could expect to make about $1,000 more a year at age 27 than a student who remained at the average. Over time, the effect seems to grow, too.

“The economists don’t pretend to know the exact causes. But it’s not hard to come up with plausible guesses. Good early education can impart skills that last a lifetime — patience, discipline, manners, perseverance. The tests that 5-year-olds take may pick up these skills, even if later multiple-choice tests do not.”

(For non-school-age-kid-parents, having an all-day kindergarten curriculum will enhance property values. Maybe not by $230,000, but certainly enough to impact the time a house is on the market. Even in a recession. Or, to tip the scales for a buyer looking at houses in both Brookfield - where they have 3 days of full-day kindergarten a week - and New Milford. Just sayin’.)

Full-day kindergarten has been part of the strategic plan for quite some time. Several years ago, JPS had a pilot program: 1 class of full-day K. Those kiddos are now in 3rd grade, and most of them still outstrip their half-day peers. Know why it didn’t continue, or expand? Budget cuts.

So, why bring the subject up now? Because of the federal stimulus grant money.

The school has $698,000 to spend before September 2012. It can only be spent on personnel (not surprising, since it’s called The Education Jobs Fund). Since the money did not come until after the school year was underway (and classes, schedules and workloads were set), most of it has yet to be spent, though the BoE has hired 2 literacy coaches and is looking for 1 math coach. So the Superintendent is proposing to spend the bulk of this money on hiring 9 kindergarten teachers.

Of course, there will be push-back on this. “Why not rehire all the teachers we let go last year?” (Because many of them got jobs elsewhere has apparently not occurred to these questioners. And because recalling teachers in the middle of a school year is ridiculously disruptive. For good or ill, we have the teachers we have for this year.)

“How will we pay their salaries the next year?” when the grant money is gone, is another question. In part, salaries will be paid for by the savings to the transportation budget. Midday bus runs for kindergarteners costs $127,000 yearly. (And while one BoE member wondered where all those kindergartners would go on the regular buses, there is apparently ample room on our existing buses).

A skeptical BoE member asked, “What will we do if we have to cut staff positions in the next budget?” I don’t get this line of questioning. What are we supposed to do? Hire no one, and don’t use the federal money? Hire a bunch of teachers on a 1-year contract? Or realize that every year, non-tenured teachers are potential victims to budget cuts?

(Another BoE member said, cryptically, in response to the principles' call for consistency between the three elementary schools, "consistency is the hobgoblin of small-minded." This person was apparently quoting Lewis Carroll. Does anyone know what the heck that quote is supposed to mean?! If I wasn't trying to be nice, I'd say something like, "I'll smoke some of what's in their hookah," but I'm trying to stay civil.)

* * * * *

[update]

It has been brought to my attention (by an English teacher) that the "consistency hobgoblin small minds" quote is not from Lewis Carroll. I looked it up: it's really the work of Ralph Waldo Emerson. (The speaker said it was from Carroll, and I, in my hubris, forgot to verify it with Google).

http://www.bartleby.com/100/420.47.html

And, as you can see, it's misquoted as well as misattributed. The full quote is:

"A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines."

Well. Reading all the words changes the meaning significantly, but it makes even less sense applied to education in New Milford. I'll leave it up to you to decide if said person is a little statesman, philosopher or divine (my money is on "member of the Michael Steele Book Club"). I guess I'll take back my hookah quip, because Emerson also once said, "Alcohol is a good preservative for everything but brains." (I know, I know hookahs are tobacco and ... other smokeables, not booze, but Ralph was curiously silent on hookahs.)

* * * * *

In my humble opinion, full-day kindergarten is an excellent investment. The more instruction students get on the from end of their education, the better they will progress in the higher grades. Frankly, I’m jealous that I don’t have a future kindergartner to benefit from this.

There are other things to applaud in the proposed school budget, including restoring the general music instruction at SNIS, and creating “head teacher” positions in each school, to preserve a chain of command when the principal and vice principal are unavailable (since several vp’s are half-time positions, and principals are regularly called off campus for meetings, this is more common than one would think). But full-day kindergarten is the most visionary piece of the proposal.

BTW, here’s part deux (that’s French for “two,” which I know because when I was in school, my town believed in funding the foreign language department. I could also sing it to you, because my middle school also had a music teacher. But I digress.) which focuses on the high school:

http://www.theeventisonline.com/NewMilford/nmboe011911.html

2. Ad-Hoc Committee Report.

The Ad Hoc Committee with the impossibly long name made its report to the Town Council. And they presented three “big ideas,” which are actually pretty good ideas.

http://www.newstimes.com/news/article/New-Milford-Town-Council-approves-matching-funds-116391.php

Even if they seem a tad “You haven’t been doing this already?” ideas. (Five months to discover “We need to communicate better between branches.” Ja think?) Still, at least that is a step forward. If the Town Council and the Board of Education can actually work as if they are on the same team (as they should), instead of opposite sides, maybe budget season wouldn’t feel like a medieval siege.

I don’t have much more to say on this at this time, except to roll my eyes at the insta-roadblocks that seem to derail even the baby steps forward. Read through these minutes to learn about what I am affectionately calling “the saga of the boilers.”

http://170.163.202.12/Weblink7/DocView.aspx?id=78012&dbid=0

The Ad-Hoc committee noted that both town and school buildings needed some new boilers, decided that a joint purchase would be cheaper than a piecemeal approach, and thought to tap the Waste Management Fund, which would keep the purchase from impacting tax payers. But, I guess, the WMF can’t fund boilers. (Tennis Courts? Yes. Boilers? No. Which I still don’t get. But then, I’m not on the Town Council or the Board of Finance. And they apparently didn’t know either, since their Ad Hoc representatives thought using the WMF was a good idea.) Alas, alack.

The mayor suggested the funds come from capital reserve accounts. Which sounds good, until you remember all the recent TC criticism of how the BoE handles capital reserve. (Last year, that account was supposed to be only used for emergencies. But, I guess that’s sooooo 2009).

http://www.newstimes.com/news/article/New-Milford-Town-Council-approves-matching-funds-116391.php

This purchase would draw that fund down to the dregs, and then, I’m sure no end of angry blog posts will condemn that “irresponsible” behavior. (And I ask you: why can town employee raises come out of a “fringe account” or a “contingency fund” but not boilers? Or at least fix the stupid railroad crossing downtown?!) But, the powers that be have vowed to “look around” for the money, so maybe there’s another stash of cash somewhere. (Couch cushions?)

3. All this brings me to my next point, which is all about greater transparency.

The Ad-Hoc committee proved, if nothing else, that greater communication between branches of local government will lead to greater efficiency. The quickest way to facilitate communication is greater transparency, and easy access to each other.

One of the best ways the Town could improve transparency would be to stream its meetings online. As I’ve said (and as you’ve seen, if you clicked the links at the top of this post) the BoE already does this (without costing the taxpayers an arm and a leg).

While the Town Council has made noises suggesting they will look into this, I hope they come through for the budget hearings at least.

[UPDATE: Miracles do happen. As I was drafting this post, the town’s website suddenly underwent a major overhaul, and lo and behold, web streaming of (some) Town Council meetings!

http://www.newmilford.org/content/2099/default.aspx

Here’s the presser:

http://www.newmilford.org/controls/NewsFeed.aspx?FeedID=418

according to which, this has been just waiting to happen for years, but, I really don’t think it’s a coincidence that several people requested the Town Council do this very thing at the January 10th meeting:

http://www.newmilfordspectrum.com/default/article/New-Milford-residents-want-more-public-access-to-955698.php

http://www.housatonictimes.com/articles/2011/01/14/opinion/letters/doc4d307260a4c8c550191538.txt

Well, whatever. Thank you, powers that be! And thank you, citizens who asked that it be done!]

When watching the TC and BoE hearings (and really, what else are you going to watch this winter? The SuperBowl?) (Still too soon?) be sure to pay attention to how people speak to - and about - each other. Last year, budget season birthed a whole slew of misinformation. I’m sure this year will have its share of pearl-clutching and name-calling. (For proof, I offer this:

http://nmbudgetfacts.com/

This gem of a webpage started as a reprint of a screed from a Town Council meeting last April. But it quickly grew into a smear campaign against the BoE. (And, maybe you remember those signs? Which basically quoted these talking points? Almost like it was a coordinated effort to bring down the school budget before the hearings even started?)

Well, a new year, a new campaign. Right?

So the site’s been updated. At least in the right-hand corner.

But right below it, all the tired old misdirection from last year remains, including the “Why I won’t vote for this budget” rant. It will be interesting to see what, if anything, gets updated. (I note 0 complaints about budget transfers and transparency regarding the Town Council’s move to give town employees 2% raises retroactive to July, even though The Good Citizens of New Milford Never. Approved. Those. Raises.)

As Linda Richman would say, “New Milford Budget Facts . Org is neither ‘new’ nor ‘facts’ nor an ‘org.’ Discuss.” (And! All! Those! Exclamation! Points! Are! Annoying!)

At any rate, I urge everyone to take anything they read on blogs (except this one! wink wink) with a grain of salt, and go straight to the source. Look over the school and town budget proposals. Attend the hearings, or at least watch them on line. The process is transparent and public participation is welcome. Educate yourselves. And for goodness’s sakes, go vote.

[update #2]

I've finally viewed all the BoE budget presentations. I have this to add:

1. I was really taken with NMHS Principal Shugrue's passionate, articulate presentation. Particularly his explanation as to why we can't simply replace teachers with robots. (I know. Who'd have guessed that would be a real conversation?) (OK. No one actually said "robots." They said "technology." But they were thinking "robots.")

Principal Shugrue outlined what he considered to be the top skills needed by every high school graduate in the early 20th century.

They include the ability to:

-collaborate

-think critically

-speak articulately

-work in a group

-take ownership of students' own learning

Amen.

(BTW, I was also taken with the other principals' presentations, but I've pretty much hit their highlights above).

2. I was pleased to see a true integration of ideas between schools. (Guess what? All-day kindergarten enhances the chances a kiddo will graduate having mastered the above list. It's almost like the school is following some kind of long-range, strategic plan ....)

3. Addressing students with special education needs is a growing challenge. 600+ students currently fall into this category. (And no, this doesn't apply to the mythical "I'm gonna say I have a special need so I can get out of doing homework" slacker-student. These are real students, with real needs.) The more proactive we can be as a school district whether it be (wait for it) all-day kindergarten, summer school (and, yes, offering bus service to summer school is a good idea. It's not catering to "bad parents," as some seemed to be suggesting. Some people can't choose between work and summer school for their kid.)

4. The mayor was on hand for the last hearing. She asked for hard numbers about the kindergarten program. Should we cue the ominous music, or should we expect another "The mayor's office has been working on this for years!" presser?

Stay tuned ........

A Real Public Option In Connecticut?

And so it would seem.

The other day for an open thread at ePluribus Media I commented on "the intended public option that should be Sustinet in Connecticut," and it would seem that is to be the case if the Sustinet Health Partnership Board of Directors get their way according to the report they handed in to the Connecticut General Assembly. Jon Walker has the key report paragraphs at FDL and summerizes it all too well, as anyone that has followed Healthcare reform closely would be aware of these realities:

Connecticut Informed That Private Insurance Exchanges Are Bad Deals for Consumers, Taxpayers

...snip...

This report demonstrates what a horrible deal the system of subsidized, loosely-regulated private health insurance exchanges is for both the uninsured and the taxpayers. Using a public health insurance program, the state of Connecticut will be able to provide low income Americans a higher level of coverage at lower personal cost and it will still have a lower overall price tag for the government.

The only entities for whom the design of private exchanges is a good deal are the drug companies, hospitals, and private insurance companies. The exchanges assure customers for the unnecessary private insurance middlemen. Loose regulation of the exchanges prevents the government from using the market power of a large pool to negotiate with the drug companies and hospitals for lower prices, and so they get higher reimbursement fees.

It seems like they might as well being making the argument for a "Medicare for All!" solution but even as only a Public Option it would force the private insurers into an honest battle for customer base, IMHO, much like the Swiss model which is leaps and bounds better than the American model we are trying to reform.

Anyways, maybe we will have a real horse race to compare models of healthcare reform?

State Healthcare Reform Horse Race

...snip...

As we mark the passing of the latest phase of health reform laws implemented on January 1st (scroll the comments there and you will see some interesting comments pointing to what I mean about cost controls and other issues, OK?), the six states Politico suggests following are Alaska, California, Connecticut, Massachusetts, Vermont and Wisconsin for various reasons ranging from the most resistant to reform in Alaska, to the intended public option that should be Sustinet in Connecticut, and all the way over to the Single Payer movement in Vermont. I would not count Single Payer as out of the question in California, either, though there is no mention of that large movement behind it.