Deficit In Framingham Water, Sewer Fund Requires Emergency Fix

FRAMINGHAM, MA — Mayor Yvonne Spicer sent shock waves across city government Friday when she announced a plan to fill a deficit a city fund that supports the water and sewer departments by taking money from the school department and using a chunk of the city's rainy day fund.

The city's Water and Sewer Enterprise Fund was $1.5 million in the red when the 2020 fiscal year ended in June. State officials will allow the city to pay that off over three years — starting with $500,000 in fiscal year 2021.

On top of that, Framingham is projecting a $2 million shortfall in the Water and Sewer Enterprise Fund for fiscal year 2021 due to a pandemic-related drop in revenue from commercial businesses.

With the $500,000 from fiscal 2020, Framingham will have to make a projected $2.5 million payment to cure the deficit before the fiscal year ends in June.

The City Council discussed the $1.5 million 2020 deficit over the summer. In July, Chief Financial Officer Mary Ellen Kelley told Councilors the city was waiting to see if a new coronavirus stimulus package might pass at the federal level, providing a way to pay off the deficit.

To fix the deficit, Spicer wants to reduce the Framingham Public Schools budget by $800,000, and reduce the approved budgets for the water and sewer departments by $100,000 each. Spicer also wants to take $1.5 million from the free cash balance, which stands at about $8 million total. Spicer's proposal would avoid a tax increase this fiscal year, she said.

Council Chair George King said Friday he was "stunned" by the mayor's proposal.

"The problem is not solved with the $2.5 million solution being proposed," he wrote on his blog. "First the solution takes 90 percent of the funds to bail out the water and sewer fund from free cash (the taxpayer’s savings account) or the school department. It is likely buying your groceries with your savings account and your cousin’s grocery budget. It does not solve your problem, it keeps you eating for a bit longer."

The City Council will have to approve financial moves. The Finance Subcommittee will likely take up the matter at a Dec. 8 meeting, with full City Council consideration possible on Dec. 15.

“It's very disappointing that the city finds itself in the position of being $2.5 million short of required funds for the water and sewer enterprise funds, and in need of City Council action in such a hurried fashion,” Finance Committee Chair Adam Steiner said. “Further, relying on free cash to make up the shortfall is a flawed strategy but it is much better than saddling the school department with a surprise bill for hundreds of thousands of dollars in the midst of a pandemic.”

School Committee Chair Adam Freudberg said Friday that the district had planned to use every penny in its $142 million budget. The district is also dealing with an enrollment drop, which could result in less money from the state. The district also wants to begin an expensive coronavirus testing program to get students back into buildings.

"My first impression is that the city should seek to use the rainy day fund and/or free cash before cutting education services," he wrote in an email to Spicer, which he published on Facebook. "This seems like a rainy day-like problem, isn't that what those savings funds are for? Then prioritize replenishment if it is possible when federal funds or beyond come in the future."

Spicer said she is preparing for the worst case in the spring if coronavirus continues to surge.

"I understand this is a lot to ask, but we are in extraordinary times and it is difficult to forecast what may occur in the next month let alone in the next seven months," Spicer wrote in a memo to Councilors on Friday. "If we recognize some recovery back to normal business operations before the spring, we may not have as great a revenue shortfall in fiscal year 2021 — but we can’t say that will happen at this time."