HomeMy WebLinkAboutAd Hoc Fiscal Committee Final Report - 10 15 2009_201401231019589035
REPORT OF
THE AD HOC
FISCAL COMMITTEE
October 15, 2009
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Background
On April 15, 2009 the Board of Selectmen approved a plan to form an Ad Hoc Fiscal
Committee (AHFC) to review certain aspects of the Town of Nantucket’s fiscal situation. The
opening two paragraphs of the convening document state the nature of the problem succinctly:
“The Municipal Budget for the Town of Nantucket faces a structural
deficit. Revenue projections are insufficient to sustain the current levels
of services provided by the Town and Schools on an ongoing basis. The
costs of providing services are growing at a higher rate than the
revenues necessary to provide services. The Municipal Budget’s
structural problem has been exacerbated by the national recession.
Revenue growth, which was already insufficient to support current
services, has slowed further.
To address the immediate budgetary challenges that are a result of
the national recession, as well as to address the Municipal Budget’s
structural deficit will require spending reductions, revenue increases or
combination of both. As spending reductions may affect service delivery,
and revenue increases may affect residents of the Town, the Board of
Selectmen recommends the creation of an Ad Hoc Fiscal Committee.”
The AHFC was asked to review the factors contributing to the deficit and make
recommendations in three specific areas:
1. Develop criteria for essential Town services
2. Recommend potential spending reductions and efficiencies
3. Recommend potential revenue increases
These three charges were divided into four elements; criteria for essential services, efficiencies
in Town operations, spending reductions, and potential revenue increases. These four elements
were used to develop a plan of action for the committee’s work.
The Board of Selectmen created a committee designed to represent the broadest possible
segments of the Nantucket population and included:
4 members of the public: 2 to be named by the Board of Selectmen and 2 to be
named by the School Committee.
1 member of the Advisory Committee of Non-Voting Taxpayers
1 member of the Board of Selectmen
1 member of the School Committee
1 member of the Finance Committee
1 facilitator
In addition to the above, the Town Manager, Finance Director, and School Superintendent or
their designees are ex officio non-voting members of the committee.
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Over the course of several weeks, the following individuals were appointed by the various
designated bodies and constitute the AHFC:
Mr. Joseph Aguiar, member of the public, appointed by School Committee, retired 9/1/09
Mr. Rick Atherton, Board of Selectmen
Ms. Jenny Garneau, School Committee
Mr. Greg Keltz, member of the public, appointed by Board of Selectmen
Ms Holly McGowan, member of the public, appointed by School Committee on
9/1/09
Mr. Neil Paterson, member of the public, appointed by the Board of Selectmen
Dr. Janet Schulte, appointed by the School Committee
Mr. Justin Strauss, appointed by the Advisory Committee of Non-Voting Taxpayers
Mr. John Tiffany, Finance Committee
Mr. Dual Macintyre, facilitator
Ms C. Elizabeth Gibson, Town Manager, ex officio
Dr. Robert Pellicone, School Superintendent, ex officio
Ms Connie Voges, Finance Director, ex officio
In addition, the following Town employees provided direct and continuing support for
the committee:
Mr. Craig Abernathy
Ms Irene Larivee
Ms Erika Mooney
Mr. Malachy Rice
Plan of Action
In order to help the committee function as smoothly and efficiently as possible, the
following plan of action was developed and presented at the first committee meeting:
Day Date Focus
Wednesday May 20 Overview of Municipal Budget
Wednesday June 3 Criteria for Essential Services
Wednesday June 17 Criteria for Essential Service
Wednesday June 24 Draft: Criteria for Essential Services section
Wednesday July 1 Efficiencies
Wednesday July 15 Efficiencies
Wednesday July 22 Draft: Efficiencies section
Wednesday August 5 Spending Reductions
Wednesday August 19 Spending Reductions
Wednesday August 26 Draft: Spending Reductions section
Wednesday September 2 Revenue Increases
Wednesday September 16 Revenue Increases
Wednesday September 23 Draft: Revenue Increases section
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Day Date Focus
Wednesday September 23 Review draft report
Tuesday September 29 Review draft report with Town employees
Thursday October 1 Public Forum
Wednesday October 7 Committee review and adoption of final report
Wednesday October 14 Presentation of report to B.O.S.
In addition to the above plan, it was agreed to provide information by email so that those who
could not attend a particular meeting were kept up-to-date on the committee’s activities. All
deliberations and votes were conducted in public meetings. The committee also agreed to have
a conference call bridge for every meeting so that anyone who could not attend in person could
participate by telephone. A draft agenda was circulated before every meeting and then
amended and approved as the first order of business at each meeting. Draft minutes were also
circulated by email for review and then approved at each of the subsequent meetings. All
documents relating to the work of the committee were posted on the Town website
http://www.nantucket-ma.gov/, and a portion of each meeting was reserved for public
comment. At each meeting, committee members were asked to undertake various research
tasks, “homework”, and report their findings at the next meeting. A draft report was prepared
at the end of each of the four elements of the committee’s charge so that ample time would be
available for revisions and preparation of the final report would be expedited.
A. Criteria for Essential Services
The committee spent most of the first meeting, on May 20, 2009, receiving an overview of the
current Municipal Budget, discussing and agreeing on the plan of action and discussing the
research needed for this first element of the charge. [Please see Appendix A for the agenda and
minutes of each meeting] The second and third meetings, on June 3rd and June 17th, were
devoted to discussing the results of research into how other communities defined “essential
services” and to developing our own draft criteria.
Once the committee had completed the list of criteria for essential services, we conducted an
exercise in which each member applied the criteria to a representative list of Town functions.
The exercise had several objectives: to test whether the criteria were “workable” as determined
by a reasonable congruence of responses; to highlight any of the selected Town functions that
need better definition; and to gain practical experience using the list. The results were tabulated
and showed that there was 100% agreement on 14% of the functions tested and 90% agreement
on 19% more functions for a combined congruence of 33% on the functions tested, which led
to the general conclusion that the criteria were workable. However, the exercise also
demonstrated that the ground rules for the application of the criteria need to be defined clearly.
In the following paragraphs, we will discuss some of the committee’s observations.
First, the criteria are only one of the tools that should be used in the budgeting process. Other
priorities can and should be taken into consideration before a final decision is made to
eliminate or reduce a service defined as non-essential by the criteria. The actual cost to perform
a function, or be saved by its elimination, should be factored in to any final decision during the
budget process. The dynamic of balancing services against funds is constantly changing. When
there are insufficient revenues available to meet expenses, some services must be cut or
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reduced or additional revenue sources must be found. But when ample funds are available,
some services are added that, over time, become accepted and expected and are viewed by
many as “essential”. The application of these criteria should help to redefine the boundaries
between essential and non-essential. As the committee considered balancing municipal
services against their costs, we developed a simple graph to illustrate the progression from
essential services to superfluous services. The graph we used is contained in Appendix B.
Second, the time period for the application of the criteria must be specified. If the time period
is one year, for example, many services might be classified as non-essential that would be
deemed essential if the period is five years. Maintenance of buildings or machinery is a good
example. Maintenance could be reduced or eliminated for a short time period – perhaps one
year – but the cumulative effect of eliminating that function could, in the long term, be more
expensive than the on-going maintenance itself.
Third, the functions to be evaluated must be clearly defined so that all evaluators understand
what is described. The functions themselves need to be divided into small groups of discrete
and similar activities. For example, “tree maintenance” might be sub-divided into “routine tree
trimming and treatment” and “removal of storm debris”. The former might be defined as non-
essential, while the latter might be considered essential. Also, those functions that are
mandated by federal, state or local laws or are governed by contracts should be so identified.
Fourth, the application of the criteria needs to be monitored to insure that the evaluator is using
the criteria as the standard, not his or her own opinions. We recommend having the list of
criteria and the list of services being evaluated next to each other during the process. Further,
each evaluator should be prepared to describe, in a peer-group discussion, what criteria that
person used to place a service in the essential category and why.
The following is the committee’s recommendation for criteria for essential services on
Nantucket and should be used with due consideration of the above observations:
An essential service provides a direct, broad-based benefit to the Nantucket
community and includes one or more of the following:
¾ Is required by federal, state or local mandates.
¾ Can only be provided by local government.
¾ Can most efficiently be provided by local government, recognizing
the unique geographic limitations of Nantucket.
¾ Does not duplicate services provided by other governmental
agencies or the private sector.
¾ Provides a service without which it is impossible to govern.
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B. Potential Efficiencies in Current Operations
The committee spent the next two sessions, July 1st and July 15th, discussing potential
efficiencies in the current Town operations. It should be noted at the outset that it was difficult,
on many occasions, to distinguish between“efficiency” and a “cost reduction” and our
discussions frequently moved from one area to the other. Nevertheless, our initial discussions
centered on the loose amalgam of recommendations called “best management practices” and
“general efficiencies”. The former includes, for example, establishing management by
objectives for each department and right-sizing the organization. Under general efficiencies,
we developed a long list of departments or functions that should be examined as candidates for
consolidation or outsourcing. In addition, we developed a shorter list of functions that could be
candidates for sub-contracting to non-profits or other non-government organizations. As the
discussions matured, we added a third general category, “specific efficiencies”, that included
such items as; establish a municipal gas station and create minimum and maximum salary and
wage scales.
During the course of our work, it became clear that the main purpose of a municipality is to
provide services and those services are provided by employees. As a general rule, 80% of the
Town’s budget relates to salaries and benefits of its employees and, to impact the structural
deficit noted above, employment costs must be reduced or taxes must be raised to cover the
level of costs. While the focus properly should be on increasing the efficiency of operations,
cutting costs, and increasing revenues, ultimately the choice will come down to reducing
services and the personnel who provide them, and/or raising taxes to cover the costs of those
services. Because employee costs are such a large portion of the budget, our recommendation
regarding them has been repeated in the three categories to which it applies: short-term
efficiencies; long-term efficiencies; and cost reductions.
We again made several observations about the process and our recommendations as they
developed. First we learned that several of the recommendations are in the process of being
implemented by Town departments. While this is commendable, constant vigilance is needed
to insure that the practices are both understood and followed over a long period of time.
Second, we observed that many suggested efficiencies have costs associated with their
implementation which, in difficult budget times, may be hard to come by. For example, one
efficiency that was suggested is to establish a municipal gas station. While a municipal station
certainly would allow for more efficient monitoring of fuel use and savings from bulk
purchases of fuel, the up-front cost of the operation could be considerable.
Finally, we concluded that we should prioritize our list of suggested efficiencies so that the
Town’s limited resources could concentrate on those top recommendations. We divided our
priorities into two groups: 6 efficiencies that, if implemented before June 2010, will have the
greatest impact on the Town during FY 2011 (July 2010-June 2011); and 4 efficiencies that, in
the longer term, will have the greatest impact on the Town's operation over the next 10 years.
The following is our recommended list:
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1. 6 Efficiencies with Identified Potential Impacts if Implemented for FY 2011
(With relevant comments from committee members)
¾ Renegotiate employment contracts for all municipal employees,
including salaries and health care benefits.
¾ Examine outsourcing Town mowing, trash pick-up, snow-plowing, road
maintenance. (Most of the road maintenance is outsourced currently.)
¾ Examine the consolidation of Park & Recreation, Community School
and Community pool.
¾ Examine alternatives for obtaining legal services.
¾ Examine reducing kindergarten to half days.
¾ Examine options for possible restructuring of Visitors Services and the
Chamber of Commerce.
2. 4 Efficiencies with the Greatest Long-Term Impact
¾ Renegotiate employment contracts for all municipal employees,
including salaries and health care benefits.
¾ Renegotiate Waste Options contract.
¾ Examine alternatives to Town’s operation of Our Island Home.
¾ Establish Management by Objectives for each Town department.
(This is a management issue)
It may be useful in the future to know all the efficiencies considered by the committee as it
developed the above list. Therefore, we have included in Appendix C a complete list of all the
efficiencies we considered.
C. Potential Cost/Spending Reductions
On August 5th and August 19th the committee turned its attention to the next section of our
charge; potential cost/spending reductions. The better part of both meetings was spent
developing and refining a list of potential reductions. In addition to ideas from committee
members, we also reviewed a list of cost-saving suggestions from Town employees. These
suggestions were submitted during the latter part of 2008 and were intended for the FY 2010
budget. The committee included a number of these suggestions in our list and we have
included the employee list, with our comments, as Appendix D. It should be noted that there
were many employees who submitted similar suggestions, which were grouped together to
avoid repetition, and several that fell into the “improved efficiencies” or “revenue generation”
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categories. These latter ideas were incorporated into the committee’s recommendations in
those sections.
After the August 5th meeting, the committee undertook a financial exercise designed to force
the prioritization of some of the suggested changes in a simulated situation. This exercise
followed the general form of a military simulation, or “war game”, but without umpires or the
use of any actual financial data. The purpose was to place the committee members, who have
very diverse backgrounds, in a decision-making situation where they would have to balance a
fictitious Town budget using both general cost reductions and personnel reductions. Among
other things, this exercise demonstrated that major budget shortfalls may require force
reductions. It must be emphasized again that this was a simulated exercise, using fictitious
data, designed to broaden the experience of the committee members. It had no connection with
the actual circumstances of the Town. The exercise problem is contained in Appendix E only
to insure that documentation of this committee’s work is complete.
The following are the potential cost reductions that the committee recommends be examined
by the Town administration. These suggestions have been placed into two groups: higher
priority and lower priority. In the first category, we placed those items that would appear to
have a large financial impact or had strong support among committee members. The second
category contains those items that would appear to have a smaller financial impact, are already
being implemented, or did not receive strong support from committee members. It is well to
remember that these recommendations are made without a detailed knowledge of the actual
financial data associated with each item. Without such data, we can only recommend that the
items be examined by the Town administration, as intelligent decisions can only be made with
full knowledge of the actual and forecasted data. There were other cost reduction ideas
examined by the committee which were, for various reasons, not included in our final list.
These items are listed in Appendix F.
1. Higher Priority Potential Cost Reductions
¾ Renegotiate employment contracts for all municipal employees,
including salaries and health care benefits.
¾ Examine alternatives to Town’s operation of Our Island Home.
¾ Examine and reduce legal costs.
¾ Examine alternatives to Town’s operation of the Adult Community
Daycare Center.
¾ Examine reducing kindergarten to half days.
¾ Examine furloughs, lay-offs, and wage and hiring freezes.
¾ Increase ratio of pupils-to-teachers in schools.
¾ Reduce C.P.C. tax surcharge and appropriation by $500,000.
¾ Examine broad spectrum of Human Services activities and consolidate,
where possible.
¾ Size each department to the minimum workload level; handle greater
workloads with overtime, cross-trained employees, or contract workers.
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2. Lower Priority Potential Cost Reductions
¾ Charge patients for Med-Flight support.
¾ Outsource buildings and ground maintenance at schools.
¾ Hire consultants only where unique expertise is needed.
¾ Move Annual Town Meeting to a single day - Saturday.
¾ Examine vendor contracts for phones, copiers, etc.
¾ Combine Town elections with nationwide elections.
¾ Examine shellfish propagation for possible private funding.
¾ Reduce and/or revise the number of classes taught in the High School
for each subject.
D. Potential Revenue Increases
On September 2nd and 16th, the committee addressed its final charge; recommendations to
potentially increase revenue to the Town. Early in our discussions of potential revenue
increases, the question of an “override” came up. While it is always possible to close a budget
gap using an “override”, if voter support for one is present, it is useful to understand the
background behind the limit on tax revenue and the mechanisms to override those limits.
Proposition 2 ½ (“Prop 2.5”) was enacted in Massachusetts over 25 years ago. Prop 2.5
operates as a limit to total tax revenue – it allows a 2.5% increase of tax revenue each year,
plus an amount for taxes on new property added to the tax roll (new growth). Additional
increases to tax revenue must be approved by the voters of the Town in an override vote, by
ballot election. There are 3 types of override vote: 1) a general operating override, which is a
permanent increase to the allowable tax revenue, 2) a capital override, which is a 1 year
increase for capital expenditures, or 3) a debt service override, which authorizes raising taxes
sufficient to pay principal and interest each year on borrowed funds. Prop 2.5 also established
a maximum rate of $25.00 per $1,000 of assessed value. The Town of Nantucket’s residential
rate for 2009 was $2.76 per $1,000 of assessed value. The tax revenue limitation results in a
formula whereby the tax rate decreases as the assessed value of the Town increases. In turn, as
the tax rate decreases, it reduces the tax revenue allowable from new growth.
It was discovered early in this part of the process that many of the suggestions would require
either changes to existing legislation or new legislation before they can be implemented.
Therefore we have grouped our recommendations into those requiring legislation and those
that do not. In addition, there were many items considered by the committee that were not
included in the recommendations listed below. Those items were not included because, in most
cases, they have already been done or the potential revenue would be quite small. Those items
are listed in Appendix G.
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1. General Court Legislation Not Needed
¾ Approve a local meal tax of 0.075% (Art. 7 @ STM)
¾ Amend local room occupancy excise tax (Art. 8 @ STM)
¾ Institute seasonal paid parking at Town lots and Surfside, Jetties and Children’s
beaches.
¾ Reduce Community Preservation Act tax surcharge amount, raise local taxes a
commensurate amount, so that the effect is revenue-neutral to taxpayers. An
alternative would be to redirect funds to Town capital budget.
¾ Examine user fees for: landfill use; street closings; use of Town facilities,
property, playing fields and programs. ¾ Review all Town-issued permits and institute charges for issuance; simplify the
process.
¾ Use wind-powered turbines and/or solar voltaic cells to reduce municipal
energy costs and to sell excess municipal power (Federal/state grants may be
available) ¾ Increase fees for Adult Community Day Care participants to cover all costs.
¾ Increase assessments to enterprise funds, where possible.
2. General Court Legislation Needed
¾ Submit legislation to require stickers on all cars on island. When approved,
institute annual fees, with high fines for non-compliance.
¾ Submit legislation to institute/increase impact fees for developers.
¾ Examine rental car medallion fees.
¾ Submit legislation to increase boat excise tax.
¾ Submit legislation to extend the room occupancy tax to seasonal home rentals.
Final Comments
The committee held two sessions to present the draft report to the public. The first, on
Tuesday, September 29th, was for the employees of the Town. The second, on Thursday,
October 1st, was for the general public. There were many useful and pertinent comments made
at these meetings which the committee took under consideration before adopting its final
report. Although no minutes were recorded at these meeting, the general “themes” of the
comments were recorded and are contained in Appendix H.
This committee was asked to take an independent look at the fiscal situation of the Town and
make recommendations for possible changes. We were asked to do this at a high level; “10,000
feet” became our buzz word, so that we would not conflict with or impinge on the
responsibilities of the Finance Committee, the School Committee, Town administration, or the
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Board of Selectmen, whose job it is to deal with fiscal issues at the ground level. Our
committee was composed of people with a broad spectrum of experience, deliberately so, in
order to give us diverse views on items we considered. We are also a true ad hoc committee
because we will dissolve after delivering our final report to the Board of Selectmen.
So what happens after we deliver our report? It is clear to the committee that a great deal more
effort must be directed toward the possibilities contained in this report before they can be
implemented. Once the detailed analysis has been done, then the recommendations and the
alternatives must be presented clearly to the citizens so that the voters can make informed
choices.
Our hope is that the Town administration will act on some or all of our recommendations and
that those efforts will be encouraged and advocated by the Finance Committee, the School
Committee and the Board of Selectmen. One fact became crystal clear to the committee during
our tenure: the Town has a structural deficit now and for the foreseeable future. We are in a
crisis – the projected deficit for the next fiscal year is $4.6 Million at this date – and it will not
go away or be solved by some accounting sleight-of-hand. And the crisis will continue into the
future until changes are made. Doing nothing is not an option. Actions must be taken, up to and
including force reductions and/or an operating override, in order to balance next year’s budget.
Hard choices will have to be made in the next few months by the Finance Committee, the
School Committee, Town administration, the Board of Selectmen and the voters. Those
choices will not be pleasant and many people may be hurt, but the decisions must be made.
APPENDIX A
Approved Agenda and Minutes from Committee Meetings
(Agenda and minutes to be added to final, approved report)
Appendix B
Cost vs Services Continuum
Appendix C
Other Potential Efficiencies Identified by the Committee
Potential Efficiencies
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Votes
Committee Comments
1. Outsource vehicle maintenance
and repair
3 Most of the Town’s vehicle repair and
maintenance is already outsourced. However,
the Town could possibly benefit from having a
consolidated contract for vehicle maintenance
and repair the Town’s sedan and light truck
fleet.
2. Examine consolidation of
Zoning office and Building
department
3 The zoning enforcement office is already part
of the Building Department. Subject to the
availability of funds, the Town intends to
conduct an organizational study of permitting
departments to determine if efficiencies can be
identified by consolidating permitting functions
in one department.
3. Consolidate school and Town
finance departments
3
4. Examine staffing levels of Town
and school departments
3 The Town has conducted two organizational
studies of 2 Town departments in the last 18
months, the Finance Department and the
Department of Public Works. The Town
intends to continue to examine the structure,
organization, and operations of Town
departments to ensure departments are:
appropriately staffed; operating efficiently; and
are following the appropriate best practices for
the department. Properly implementing the
recommendations of an organizational study
takes time, and in some instances may require
additional resources. As recommendations of
the organizational studies that have been
conducted are close to being fully implemented,
Town Administration intends to recommend
conducting an organizational study to identify
efficiencies for the Town’s permitting
departments, which includes: the Building
Department; Historic District Commission; and
Conservation Commission.
5. Add positions to increase
analysis and reduce consultants
2
6. Examine Human Services for
overlaps
2
7. Examine subsidies to N.R.T.A, 1 The Town does not provide a direct subsidy
to the N.R.T.A. However, the Town is
assessed by the state for N.R.T.A. This most
recent assessment, which is assessed to any
Town that is part of a regional transit
authority, is $304,121. The state deducts this
assessment from state local aid payments to
the Town. The Town does not use locally
generated revenues to pay this assessment.
Without this assessment, Nantucket would not
be able to have a regional transit authority,
which means that bus service would no longer
be provided.
8. Create minimum and maximum
salary and wage scales
1 Contained in contracts now; the Town will
conduct a wage study in fiscal 2011.
9. Examine school administration
and structure
1 Actively being implemented
10. Examine/reduce number of
drive-home vehicles
1 Of the 118 sedans and light trucks, only 12
vehicles are authorized as take-home vehicles.
Three departments have authorization for
take-home vehicles: Police Department (7);
Fire Department (2); and Department of
Public Works (3). All personnel authorized to
take-home a Town vehicle are on call 24
hours a day, 7 days a week to respond to
emergencies. With the exception of the Chief
and Deputy Chief for the Police and Fire
Departments, Town policy dictates that take-
home vehicles may be used only for official
Town business. 10 of the 12 vehicles are
provided to key personnel to improve
response times in case of emergency. The
remaining two take-home vehicles are for
canine officers, who care for their canines at
home, and require specialized vehicles to
transport their canines. Eliminating these take
home vehicles will effectively eliminate the
Police Department’s canine program.
11. Examine payments from
Enterprise funds
1 The Town has had a collaborative relationship
with the Water Company and the Airport.
The Water Company administers sewer
billing for the Town and maintains fire
hydrants at no cost to the Town. The Airport
serves as mutually aid for the Town’s Fire
Department, and has purchased heavy
equipment for the Fire Department that can be
used to respond to emergencies at the airport
and elsewhere. The Airport has also provided
land to the Park & Recreation Department to
use for playing fields.
Over the last year the Town has worked with
the Water Company and the Airport to
develop a mutually agreed upon indirect cost
methodology. Under this methodology,
which is transaction based, the Water
Company and the Airport will provide
payment to the Town for administrative
support the Town provides to these enterprise
funds. The Water Company has accepted this
methodology, and the Airport has accepted
this methodology in concept. However,
approval of the indirect cost methodology is
needed from the Federal Aviation
Administration.
12. Examine combining Police and
Fire dispatchers
1 This effort is underway, and the Town
expects to implement centralized dispatching
upon completion of the new Public Safety
Facility.
13. Consolidate/outsource beach
management
1 Cleaning is outsourced now
14. Create an environment of
continuous improvement
1 The Board of Selectmen, as part of its Goals
& Objectives Process, has adopted the Goal to
Improve Administrative Management. This
Goal is supported by the Town Manager’s
2009-2010 Management Priority to: Continue
to identify and implement ongoing
efficiencies with municipal organizations and
annotate processes, procedures and policies.
This Management Priority is similar to a 2008
– 2009 Management Priority to: Continue to
analyze and identify ongoing efficiencies with
municipal organizations and functions.
The Town Manager has established these
Management Priorities in an effort to create
an environment of continuous improvement.
In order for this effort to be successful, it is
important for continuous improvement to be
emphasized in all facets of Town government.
15. Remove all management
personnel from bargaining units
1
16. Outsource school and Town 1 Outsourcing the processing of payroll will
payroll processing still require having a Town employee
dedicated to collecting payroll information
and providing the information to the vendor to
process payroll. The additional cost of paying
a vendor to process the Town payroll, in
conjunction with the fact that staff will still
need to collect payroll information, suggests
that little if any efficiency will be achieved
through outsourcing the Town’s payroll.
17. Centralize purchasing of all
departments
0 This effort is already underway. Beginning in
August of 2009, the Town will phase in
centralized purchasing for all Town
departments. Centralized purchasing is
scheduled to be fully implemented for all
Town departments by October of 2009.
Centralized purchasing will not include the
Airport or the Schools, which could consider
participating in the Town’s centralized
purchasing program in the future.
18. Outsource school maintenance 0
19. Focus on all Town stakeholders 0
20. Outsource certain functions to
non-profits and others
0
21. Charge for Medflight support 0
22. Privatize ambulance service 0
23. Eliminate/reduce number of
Town cell phones
0 Cell phones are a useful tool for departments
that frequently conduct business out of the
office. Providing centralized management of
cell phones, rather than having departments
individually manage cell phone usage, could
result in an efficiency.
24. Negotiate bi-weekly or monthly
pay periods
0 This effort is underway. The Town has
negotiated bi-weekly pay with the Police
Union, and the Laborer’s Union has agreed to
switch to a bi-weekly pay period when it is
ready to be implemented Town-wide. A bi-
weekly pay period will be implemented for
contractual employees this fall. The Town
needs to reach agreement with the DPW
union, SEIU and the Fire Union to fully
implement a bi-weekly pay period. The
Town will seek to reach agreement with these
unions on bi-weekly pay during contract
negotiations with these unions.
The Town has also implemented direct
deposit, which is more efficient than issuing a
paycheck.
APPENDIX D
Cost Savings Suggestions from Town Employees
1. Reduce number of Town employees by 10%, through attrition, except in areas of public
safety.
2. Have Town employees contribute more to health insurance premiums.
3. Replace Town vehicles less frequently.
4. Reduce vehicle fuel consumption by 10%.
5. Cancel newspaper & magazine subscriptions.
6. Sell Town-owned property – 19 Masaquet Ave. (Map 80, parcel 140) 2.2 acres; was bought
for NHA to use for affordable housing. Too many units in that area.
7. Have those who are issued “community service” tasks by the courts assist DPW in keeping
downtown clean.
8. Do an energy audit of all buildings; turn down heat; lower hot water temperature.
9. Shift some offices to a 4 day week. (Many variations of this and other suggestions to
reduce pay/hours worked)
10. Have title searches done locally, not by Boston lawyers.
11. Review boards and commissions to possibly reduce the frequency of meetings.
12. Use recorders for official minutes; eliminate paper copies of minutes.
13. Cut all travel for commuting employees since the Town has already paid for them to have
home offices.
14. There is more than $2,800,000 in outstanding from tax title properties; be more aggressive
in collecting it. (List of delinquent properties, with owners’ names was attached)
15. Have DPW mow grass at Town building parking lot – a landscaper does it now.
16. Hire a full-time attorney to handle most Town business; hire specialists when needed.
17. Renegotiate the Waste Options contract.
18. Charge Town employees for B,M,D certificates (they have been getting them free)
19. Partner with NHS work-study program to get interns to do office work (scan documents,
enter data, etc).
20. Place a video camera facing the Fire Department gas pumps; file charges for unauthorized
use.
21. Conduct an anonymous survey of all teaching staff – Based on your experience over the
past 12 months, which position(s) could be eliminated without impairing your ability to
perform your job effectively? Rank your choices.
22. Cut $20,000 from 015231/53100 ACDC budget line. Old money not used for staffing
anymore.
23. Have a one year moratorium on professional development.
24. Raise rental car medallion fee to $100 for MA registered vehicles; $200 for out-of-state.
25. Charge for street/sidewalk blocking permits.
26. Many additional suggestions for raising existing fees or instituting new ones.
Appendix E
Simulated Financial Crisis Exercise
Background
Military simulations, also known as war games, are simulations in which theories of warfare
can be tested and refined without the need for actual hostilities. They have evolved over the
centuries, are a useful way to develop tactical and strategic solutions to defined problems, and
provide useful experience to the participants. This exercise borrows the simulation concept and
applies it to a financial situation the Town might face in the future.
Situation
The following situation cannot be challenged or modified by the participants, but must be
accepted and used as the “tactical” situation for the exercise:
Time: February, 2010
BOS position: There are efficiencies and cost reductions that can and should be made
to balance the budget. The board recently voted not to recommend an override.
FinCom position: We concur in the B.O.S. position not to recommend an override to
ATM.
Recent I&M survey results: 76% of the voters do not favor an override or an increase
in fees or taxes.
Exercise Problem
A $3,000,000 gap between revenues and expenses for FY 2011 has been projected and you
have been asked as a knowledgeable, but independent, observer to recommend steps to balance
the budget using a combination of:
a) elimination/reduction of non-essential Town services;
b) greater efficiencies in Town functions;
c) cost reductions; and
d) force reductions.
Financial data
The following estimates for FY 2011 are entirely fictitious and have been created for exercise
purposes only. The services, efficiencies and cost reductions, listed in this exercise, however,
have been taken from the earlier work of the AHFC.
1. Reduction of Non-Essential Services FY 2011 Savings
Fire prevention programs $100,000
Beach management $50,000
Shellfish propagation $100,000
Tree maintenance $50,000
A.C.D.C. $200,000
Geriatric psychiatry services $50,000
2. Greater Efficiencies FY 2011 Savings
Outsource Town mowing, snowplowing, etc. $50,000
Consolidate P&R, Community school, pool $300,000
Reduce legal service costs $150,000
Restructure Visitors Services $100,000
Half-day kindergarten elimination $300,000
Consolidate Town/school finance departments $100,000
3. Spending Reductions/Savings
Charge for MedFlight support $75,000
Increase ratio of pupils/teachers $400,000
Outsource maintenance/grounds at school $100,000
Consolidate Human Services functions $100,000
Increase personal health care contributions by 10% $400,000
Move ATM to a single 8 hour day $25,000
Suspend sidewalk maintenance for 12 months $25,000
Suspend pond openings for 12 months $25,000
Reduce pupil services $50,000
4. Force Reductions
Average annual savings (including benefits)
for each individual removed from Town or
school payroll $75,000
Required Exercise
Using only the above information, please prepare an itemized list of the specific steps
you recommend to the Town administration to balance the FY2011 budget. Please keep
in mind that the total of all your recommendations must total $3,000,000.
APPENDIX F
Other Cost Reduction Ideas Considered
1. Buy out employees on a case-by-case basis and replace with new hires at lower salaries.
2. Move Annual Town Meeting to a single day, Saturday.
3. Reduce number of drive-home vehicles.
4. Reduce number of cell phones.
5. Reduce non-emergency departments by 20%, i.e. building, marine, DPW.
6. Renegotiate union contracts.
7. Institute 20% co-pay on employee health plans.
8. Institute a defined contribution plan for retirement, if not already in place.
9. Reduce the number of Police department summer specials.
APPENDIX G
Other Suggestions to Increase Town Revenues
1. Eliminate Town/school employee discounts for municipal services and facilities. (All
discounts have been eliminated except for reduced fees at the community school)
2. Examine an operations override at ATM to close the budget gap. (This is always an option)
3. Institute a bicycle sticker program for all visitors bringing bikes to the island.
4. Institute a rental bicycle and/or moped medallion fee.
5. Examine payments in lieu of taxes by organizations exempt from taxes.
6. Increase residential exemptions above 20%, the limit set by legislation.
7. Examine a surcharge on all food and vehicle fuels with revenue to go to Town.
8. Submit legislation to redirect Land Bank revenues to municipal purposes.
APPENDIX H
General Themes Expressed by the Public at Meetings Concerning
the Draft Report
1. Tuesday, September 29th
¾ Proposition 2 ½ Override The voters should be provided the opportunity to
consider a Proposition 2 1/2 override. Nantucket has a low property tax rate, and
the property tax bills for Nantucket are extremely low. If an override is presented,
then consideration should be given to seeking legislation to increase the Town's
residential exemption.
¾ Potential Cost Savings at Schools The Elementary school is under state
corrective action and reducing full day kindergarten and increasing class sizes could
jeopardize the school’s efforts to get out of corrective action. Further, reducing all
day kindergarten goes against a national trend of requiring all day kindergarten.
Reducing kindergarten from all day to half day would be a step backwards for the
Town's educational system.
¾ Solid Waste Enterprise Fund The deficit in this fund needs to be solved The
Town has done a good job in addressing its budgetary problems, but the problem
with the SWEF cannot be solved by the School and the Town.
¾ Value of Services The value of services, not just the cost, needs to be considered.
People help make Nantucket a great community and that includes the people who
work for the Town and the services that are provided. We are all in this together.
The "us vs. them" mentality needs to be overcome. Town and School employees
are members of the community and tax payers
¾ Job Losses Jobs are a leading economic indicator, and cutting jobs will not help
Nantucket's current economic situation.
2. Thursday, October 1st
¾ In-sourcing Rather than contracting out for a number of different maintenance
services, it may be more cost effective to have Town departments and the School
work together to collectively provide maintenance services. This could mean better
communication and coordination, or consolidation of functions for the School,
DPW, and Parks & Recreation. Such an approach could realize efficiencies with
labor and equipment. Could there be a Town yard or general store to reduce material
costs for the Town? John Smith, who is a foreman for the DPW, recently took the initiative
to negotiate a commercial rate for the Town with Marine Home center. The Town will be
eligible for a commercial discount of 7%.
¾ Measuring Public Opinion How can we better engage people in the process? It
would be helpful to get more feedback from the citizenry on its thoughts about
service reductions, tax increases, or a combination of both.
¾ Taxes vs. Fees If new revenue is considered for the SWEF should that revenue be
generated from property taxes or fees? Property taxes will have less of an impact
on year round residents because it is spread across the tax base, while fee increases
will impact the year-round resident more.
¾ Impact of Mandates The Town is mandated to clean up the landfill, which
increases the cost of delivering services but not does not increase service delivery.
There are other mandates that may need to be fulfilled, but fulfilling those mandates
may be more administrative in nature and not provide direct service delivery. Yet
there is a cost to meeting those mandates.
¾ Generation of Revenue Are there ways other than taxes for the Town to generate
revenue? What does the Town have of value that could be used to generate revenue
for the Town's operations? The Town may be able to tap into renewable energy
sources, primarily wind, to generate electricity that it may be able to sell. (Please
see p.10, item 7 under “General Court Legislation Not Needed.”) Are there things
the School can do to generate revenue such as a school store or having cooking
classes sell baked goods with the revenue split between the school council and the
School?