Departing Framingham CFO Sets the Financial Record Straight

On December 29, 2023, the departing Chief Financial Officer, Louise Miller, submitted her final report to the city administration and the City Council. In 22 pages, it laid out all of the key financial and operational information needed to ensure a smooth transition in financial management for the city. The document may be viewed here:

Summary of Priority Finance Items and Summary of Key Financial Information

It is the work of a very capable Chief Financial Officer dedicated to bringing sound financial and operational management practices to the city. The report covers every operational area in the administration including City Council, Mayor’s Office, CFO’s Office, Accounting, Purchasing, Assessors, Treasurer/Collector, Legal, Human Resources, Technology Services, City Clerk & City Elections, Planning & Community Development, Capital Planning & Facilities Management, Media Services, Police, Cable Fees, Opioid Settlement Fund, Fire, Inspectional Services, Weights & Measures, Framingham Emergency Management, Animal Control, Unemployment, Group Insurance, Medical Indemnification, FICA/Medicare, Sick Leave Buy Back, Liability Insurance, Self-Insurance, Salary Reserve, Engineering, Public Works Administration, Highway, Snow & Ice, Street Lighting, Fleet Services, Sanitation, Cemeteries, Health Department, Callahan Center, Veteran’s Services, Library, Park & Recreation, Arena, School Department, Reserve Fund, Charter Commission, Committees, Water & Sewer Enterprise, Water & Sewer Rate Setting.

The length of that list and the detail in the report attest to Louise Miller’s competence and devotion to her job. It also highlights what a difficult time the city is going to have filling the huge void created by her departure.

The reputational assaults carried out recently on the CFO by the City Council Chair, Phil Ottaviani, the Finance Subcommittee leadership team of George King and Mike Cannon, and the now departed Councilor John Stefanini, combined with the obvious lack of support from the Mayor, Charlie Sisitsky, engineered an inevitable CFO departure.

No competent, professional CFO could have stayed on in such circumstances, and her treatment has created a toxic hiring environment, which prospective CFO candidates would avoid like the plague.

Louise Miller has done a remarkable job in the extremely difficult financial environment created by the City Council policy of forcing property taxes below inflation increases for the last 6 years, resulting in the loss of about $30 million/year in city tax revenue.

After 4 years of 0% property tax levy increases, her pressure to move the city into a better financial position pushed the property tax levy increase up to 2% in both of her annual budgets. By doing this, she managed to hold off a further Moody’s bond rating downgrade to Aa3 from Aa2, but as she warns in her report:

“Moody’s continued to express concern over the tax levy and the slow growth in the City’s operating budget and the City’s ability to maintain services.”

Without her at the financial helm of the city, the city is likely to see its bond rating drop to Aa3. That would be a big further hit to the city’s financial reputation and would make borrowing more costly. The community should thank the City Council Finance Subcommittee, especially King/Cannon/Stefanini for navigating the city into those financially troubled waters.

Related to the problems caused by the city’s financial position being undermined by the City Council is the warning in the Louise’s report for city departments to begin planning for a 2% budget cut in the next fiscal year, FY25.

The city has been filling its property tax revenue gap by deploying federal COVID aid and diverting Chapter 70 state education aid to help deal with the $400 million infrastructure maintenance backlog created by the City Council financial miscalculations. In FY25, new growth from property development will not help in the way it did in the past, having dropped in FY24 by $1.3 million, and projected Chapter 70 aid for FY25 looks level. There will be no big FY25 Chapter 70 aid increase to hijack for cityside repairs and to fund more tax cuts!

There also is something very odd going on with the city parking lot project which looked to be all set, with one of the best firms around, Arrowstreet, on track to be awarded the contract. Someone seems to have thrown a spanner in the works there and the community should pay close attention to that situation.

Finally, there is the matter of the water billing fiasco. Louise Miller inherited a real mess there when she arrived in January 2022. She faced another infrastructure debacle, where water meters had been allowed to reach their end of life, with no replacement plan. She set to work to fix that and has made great progress. She has uncovered a major underbilling problem, which she described clearly in her report. I have included a detailed excerpt from her report at the end of this piece.

The departure of Louise Miller is a major setback in the effort to ensure the City of Framingham achieves financial stability, and manages its infrastructure assets and its educational system soundly.

With the same Mayor in charge and the same leadership approach in the City Council, it is hard to see anything but a very rocky road ahead.

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DETAIL

Here is the detail on the water billing problem. It can be found on p. 21 of Louise Miller’s report, accessible via the link at the start:

“The last issue that was uncovered is a serious issue and relates to incorrect billing of multi-family dwellings, including condominiums and apartment buildings. The City has approximately 3,000 multi-family dwellings being billed for water and sewer. Of those, approximately 1,500 or half are billed properly according to the City’s billing rate structure. However, approximately half of the multi-family dwellings are receiving a significant discount and paying only 10% of the billed usage. The reason this was difficult to uncover is that the bills were manipulated at the account level. This means that, in the past, someone physically set the bills to bill incorrectly. No policy has been followed to explain this discrepancy. Nor has an analysis been done at this time of who the customers are and why there was a different treatment of different properties. What is clear is that half the customers are receiving a significant discount, which totals in the millions of dollars of lost revenue. The issue was uncovered when broken meters were replaced and the account was reset to receive information for the new device. These are all residential units. Council had stated that no back charges were to be imposed on residential units, so none have been imposed. Even with no back charges, the owners of multi-family units, whether condo associations or building owners, are shocked by the amount by which their water and sewer bills are increasing based on existing rates. I would recommend that the City consider a multi-family rate to account for the fact that each individual user may be using water at a rate lower than the combined rate of all the users in a multi-family dwelling, but a rate that still accounts for the increased infrastructure usage from the density of multi-family dwellings. This may mean creating a larger tier 1 and tier 2 for multi-family housing.”