Newton Must Rethink Its Lavish Employee Pay Raises

From David Spier

Obviously, an almost $3 million School Department budget shortfall is an attention-getter.

While the School Board has enumerated specific causes of the shortfall, and is working on solutions in a timely fashion, I would like to offer an additional perspective.

At Newton Taxpayers Association we have been concerned for some time that City spending exceeds it means. The vast bulk of City spending is school spending, which renders School Board fiscal decisions most prominent.

For several decades the School Department has followed a trajectory that leads to significant fiscal challenges.

At present, Newton owes $1.4 billion comprised of bonded debt plus monies borrowed from contractually-obligated employee benefit pools. Much of the borrowed monies have been used over the years to make up for shortfalls in operating expenses.

Specific to the School Department budget, Newton currently commits to employee compensation that exceeds our tax collections.

Proposition 2 1/2 limits our taxes and, when taking into account increases in property values and properties, the City expands its collections by 3-5% annually. For example, my property tax increased 4% this year.

In the most recent school year, we have committed to increase spending per employee beyond this 3-5% range:
a 6% increase in the combination of step pay scales with a cost of living adjustment
a 5% increase in related benefits comprised of:
• City-paid insurance premiums;
• actual contributions to pension pools for retired employees; and
• additional contributions that begin to repay borrowed retirement, health insurance
and life insurance monies.

The Federal cost of living value for 2016 was only 0.7%, but in Newton it was 2%. Newton increased its collections by about 4%. However the increase in total compensation for each School Department employee is about 5.8%. These figures simply don’t add up.

Newton has been increasing such deficit spending almost every year for over 20 years. This is the trajectory Newton has adopted reflexively, creating ever more difficult fiscal problems.

Further, the Mayor’s plan to repay monies borrowed from retirement and insurance coverage pools is inadequate. It is based upon unrealistic investment returns. We will have to increase spending well above 5.8% to produce the funds that should have been set aside for past and present employees.

Now is a valuable time to focus on fiscal realities and take a long, hard look at our spending habits.

While the School Board has a few specific adjustments already in mind, they have a responsibility to taxpayers to begin to address the larger issue. Habitually spending more cash than you take in never ends well.