Councilor Quaverly Rothenberg – An Alternative MAP to the School Budget

Video Recording: Northampton Open Media – 6/17/24 City Council Special Meeting

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Video Time Stamp: 1:50

QUAVERLY ROTHENBERG: Thank you, President Jarrett. I am very grateful for this opportunity as a representative of Ward 3 to make a presentation regarding alternative budget plans.  I first want to take a moment and frame us in the context of municipal government to understand why a city councilor might be giving a presentation such as this.

What we do in Northampton is we first elect a mayor, someone that we hope will carry out work in a way that reflects the values and priorities of our community and that they’ll be able to do that with an expert staff.

But we also have another balance on that branch of government, which is our legislative branch: this is the city council. And the purpose of this is that the people of Northampton need to have a voice. Each one of us from the different wards represents the public. I represent Ward 3, which includes Joe’s Pizza, Bridge Street School, The Meadows, and Paradise East.

When it comes time for budget season, the city council has to approve the mayor’s budget. This essentially means that the people of Northampton have to approve the mayor’s budget. It has to match our values and our priorities and be fiscally responsible.

This year, I have not been in a position where I’ve been able to accept or approve any of the proposed budgets on behalf of Ward 3. The main sticking point has been the school funding. Ward 3 as a whole — and the city more broadly, as far as I can tell from emails I’ve received and conversations I’ve had with constituents throughout the city — feels that school funding is a major priority for Northampton. This is a core value to our constituents.

Tonight, I want to introduce you to some ideas and suggestions, a map forward for how we as a city could refine and improve and really smooth out our budgeting processes. This way, when we get to this point next year, we will be better positioned to say as ward councilors that we wholeheartedly, on behalf of the people of Northampton, approve the mayor’s budget.

I have tried to learn from the DOR, from councilors from other cities, and from constituents all throughout this city to put together ideas that meet many parameters that many diverse viewpoints would support. I will walk you through those tonight.

But first, I want to make sure that we take a moment to pause and really frame the problem that we’re facing right now, which is the hidden cost of these cuts to our schools. We will go through this for just a few minutes, first with Dr. Joanne Morgan, who is a first-grade teacher at Bridge Street Elementary School. She can tell us more about what the impact of the proposed cuts will be in the classroom. Then we will turn to Ms. Kate Fontaine, who is part of NASE leadership and teaches history at the high school. She can give us a sense of the financial repercussions for schools when we make these sorts of cuts.

Finally, I’ll turn to a financial expert, based on his many years on a city council in Connecticut — he was also Deputy Mayor — Al Simon. He’s going to walk us through what is really the crux of the conversation and the presentation tonight, which is:

Northampton has a very interesting financial model from about 10 to 15 years ago that was born out of wanting to increase our savings during a time when we were struggling to stay in the green and were in the red. This model has been effective at raising our savings. Unfortunately, a byproduct of it now is that it’s been driving our schools into a more compromised position every year. Of course, as people of Northampton, we don’t want that. We love our schools. We really need to come up with a process that helps us balance not just those reserve accounts but also other priorities. So we’ll go through what that process might look like to get us to a better budget.

Without further ado, I will let Dr. Morgan take it away and tell us about what it looks like on the ground at the schools.

JOANNE MORGAN: Elementary School Statement

QUAVERLY ROTHENBERG:  Thank you. I just wanted to note, before we switch to our next speaker — and I think this is very important, and Dr. Morgan raised it — the schools are already struggling with understaffing. I’ve heard that at our high school, for example, Principal Wherli has told us that we are something like eight general education teachers and four special education teachers short at baseline.

I want to make something very clear for the public that I think has been very unclear in the public discourse about school funding. We have heard a figure again and again: 14%, 14%, 14%, that the schools have grown by 14%. And that makes them sound very expensive and very unwieldy. I want to help you put that number into context:

The schools cost a certain amount of money every year. The next year, they cost on average 4% more, for the past seven years in a row. Last year they were about 3% more expensive than the year before, and we’re seeing the same thing this year. The schools did not become 14% more expensive.

What the 14% represents is how much of a greater space and share of the budget this mayor needs to give to the schools to actually fully include them permanently in our, budget because they have been paid with bits and pieces, odds and ends, and almost treated like an ugly stepchild of our budget. But they belong in the base operating cost; and once they are there, their growth is very stable and predictable.

So I just wanted to say that before I pass it back. And of course, as I said before at the beginning, we will go through very reasonable, simple, smooth ways to grow that budget and grow that share of the budget for the schools in a way that meets all of our constituents’ needs.

ALEX JARRETT: Councilor Rothenberg, sorry before you switch over, just want to make sure you have time for that presentation because there’s now 18 minutes left in presentation form. Thank you, go ahead.

KATE FONTAINE: High School Statement

QUAVERLY ROTHENBERG:  I’m going to bring in Al Simon. And I want him to show us how, while our class sizes are approaching the bottom 5% in the state due to being so large, our savings are in the top 5%. He’ll give you his numbers.

AL SIMON: Good evening. I have a few slides. Can we go to the first one? Actually, my bio, an explanation of why I’m sitting here: I moved to Northampton five years ago from Windsor, Connecticut. There, I was an elected member of the Town Council for 18 years. Six of those years were as Deputy Mayor, and for 12 of those years, I was the chair of the finance committee.

There are a lot of similarities between Windsor and Northampton, but some differences too. One difference is that we had a “town manager” form of government, so the Town Council was the highest authority. We employed the town manager and provided oversight. He worked for us, and we had the final say on the budget, which we could increase as we felt appropriate.

Let’s go to the first slide.

There’s been a lot of talk about a deficit from the mayor. The status of Northampton is actually the opposite of a deficit: it is surplus, surplus, surplus, surplus. I looked at the independent audit and went back to 2012. That was an arbitrary figure; I wanted at least 10 years to see the history of budget surpluses or deficits. What you see is a trend of surplus since that time, with an unbroken chain of higher surpluses every single year until we get to the pandemic year. This past year, ending June of 2023, we had almost an $8 million budget surplus.

The chart you’re looking at has two components: I looked at the revenues and the expenditures. The number at the bottom in blue represents the amount of revenues over budget, meaning we underestimated the revenues. The number on top is the amount of expenditure that we had budgeted but did not spend. Since 2016, our budget surplus has been about $4 million or higher every single year except for the COVID year of 2020.

You cannot have a deficit and a surplus at the same time. This surplus is certified by the state of Massachusetts and our independent auditors, and I have every reason to believe that it is correct.

QUAVERLY ROTHENBERG:  Do these figures include ARPA money? 

AL SIMON:  No, this does not include ARPA money. This is strictly revenues and expenditures, not any other certified free cash. So, the real number is even higher than this.

So then I wanted to look at the actual amount of cash that we have.  (Next slide) 

This is cash on hand. And I’ll be honest with you: I’ll probably run out of adjectives to describe how astounding the amount of cash Northampton has. I’ve called it here a “mountain of cash” because it’s truly an extraordinary figure, based on my experience. You can see how successful the stability plan was over time in putting money into savings accounts.

There are two figures here: the first, the bottom number in blue, is what’s called the unassigned general fund, where the stabilization accounts are; the number at the top, the brownish color, is the assigned general fund. That is money that has been moved with the intent to be spent in certain ways but has not yet been spent.

All of this money, every single dollar, remains under complete city control. The city can change what it’s spent on if it wants to. Some appropriations will require five votes from the council, some will require six; but the point is it’s completely under city control.

That mountain to the right totals $50 million. There’s an additional $35 million in cash that is not on this chart because there are restrictions tied to that money, so it is not completely under city control.

Thank you. Can we go to the next one?

As you know, our bond rating agencies give us reports every once in a while. The last report available, which is online on the city’s website, had this interesting comment from September of 2022: “Northampton consistently maintains reserves higher than the median for comparably rated state peers.” This puts us in the top 50% by that statement, and that is prior to the receipt of the ARPA monies, which just blew the top off the total savings.

I decided to try to find some comparison data. Next slide, please.

I was able to find a website for the Division of Local Services for the Massachusetts Department of Revenue. They have a great database that you can sort and filter. I decided to sort it by total stabilization fund balance, from high to low. What did I find? Northampton has the ninth highest total fund balance of 351 Massachusetts municipalities. That’s incredible for a town of this size.

Let’s go to the next one. 

I sorted again by total stabilization funds as a percentage of budget. If you look at our fund balances as a percentage of the total budget, what you’re going to find is that Northampton is now 15th highest out of 351 municipalities for having cash on hand as a percent of budget.

And if you look a little closer and only consider cities with budgets of a hundred million dollars or more — and there are quite a few: at least 25% of the municipalities are hundred million or over — for communities with a $100M-or-over budget, we are first in percentage of cash against budget. That is astounding for a town of this size.

What it looks like to me is: the stability plan has had a priority to generate cash, and it has done it very successfully. Unfortunately, the stability plan is not providing sufficient recurring funds to the Northampton public schools, and that is why we’re having this discussion.

QUAVERLY ROTHENBERG: Thank you. Now I will run us through some suggested solutions or paths — or, as we say, a MAP toward solutions. MAP stands for Municipal Appropriation Plan, because the budget is the biggest appropriation we make every year.

The first recommended step — and this one comes directly from the DOR (Department of Revenue) — is… 

To correct a misunderstanding, it’s often said that the DOR suggests the best practice is 5 to 7% of your budget in free cash, and saving it away. That is not at all what it says. If you read the whole context, what it says is that every single city has to decide for themselves anew every year how much money should be going into savings. They recommend every year, and especially this year when most cities have very high reserves because of COVID — and as Mr. Simon said, we have had high reserves for a long time — that you should be looking at your policies about building and saving reserves.

The reason you generate free cash is twofold: one is to protect yourself from the risk of going into the red, and the other is to build savings. We have, I would suggest, a full savings account. But what I am suggesting is not that you take my word for it, and not that I dictate it, because I am just one councilor representing one ward full of people. Instead, we should have a comprehensive review and community discussion about the appropriate level of reserves for our city given our unique circumstances. {}This means involving various stakeholders, including financial experts, city officials, educators, and the public, to create a balanced approach that ensures fiscal responsibility while adequately funding our schools and other essential services.

I think that you should create a budget and fiscal oversight committee. This committee should determine the year’s target amounts for free cash based on your target savings amount. What this will do is allow your mayor to know whether she has any more money to work with in the budget. For example, you could give her an extra several million dollars and say, “Make your budget that much bigger. We’re only going to put 2% into this year, because our savings are already full. We don’t need to focus on that target; we need to make our budget bigger right now.”

The next thing you can do is institute an annual school committee goal-setting process. Now, I want to be clear about what kinds of goals these are: this is setting a target for what you want your schools to look like. What does Northampton want their schools to look like? How do we want to rank in the state? How big do we want our classes to be? So, this is a target that we would set before the school committee sets a budget. They would think about how they’re going to gradually be thinking about their hiring and so on, to meet these goals.

The third is to establish annual operational audits of selected major departments. This should happen before union contracts are negotiated with things like Fire, Police, DPW. This will help you really have a better sense of whether you have enough people, too many people, enough equipment, too many pieces of equipment, and if you’re doing things as efficiently as possible.

This, number three, can also make room in your budget. It can make your expenditures smaller. You can bring in certified auditors for this or you can bring in retired mayors from other cities, retired heads of DPW, things like that, who can really help bring a fresh perspective. And I’ve heard that you would be surprised: not only can you save money, but you sometimes can even end up with better service when you put those two heads together, with an expert from another city.

Finally — and I think this is one of the most important ones — create an opportunity for the people of Northampton to collaborate in budgeting. Now, again, we have a representative form of government; the people of Northampton have representatives. I would propose that the councilors have Town Halls early in the budgeting season. This way, we can bring them the mayor’s first view budget and say — sort of a teach-in — “Here’s what this budget looks like for the community. Is this meeting your needs? Is this what you were hoping for, for your schools? Is this what you were hoping for, for your DPW?” Have those conversations early.

So essentially, what this map is, is getting a jump on the planning. When the mayor comes to us — and I would suggest she shouldn’t come to us in December, she should come to us in October — with her first view of the budget, we immediately go down this list and start doing these four things, so that by the time we get to May we have hit so many targets and the mayor has parameters to work with, and by the time we’re in May and June, we are celebrating this mayor for her wonderful work on this budget.

We know she’s working hard. We see how well her fiscal stability plan is doing what it’s intended to do. She’s hitting targets like bananas. We just want to help you define more targets so that you can end up with a more well-rounded budget. And we think that we should be doing part of that work with you.

In closing, I would say that this year, you really ought to just spend your free cash, spend from your stability fund. We have the money to do it, and we have a “map” forward that makes it make sense, because we can solve this long term. Thank you so much. 

ALEX JARRETT: Thank you, councilor and panel.  Cathy, would you stop sharing your screen? Okay, thank you. So now we will have a discussion and questions for the council with the counselors, the mayor, and um, the panel. Questions for the panel and mayor.

(35:39)MAYOR GINA-LOUISE SCIARRA: Thank you. Well, I mean, we can respond to some of the slides if you’d like. Or I don’t know if councilors have questions.

You know, what we need is a plan that deals with the deficit. And we need one that deals with the deficit next year, not years down the road. We’re not simply facing a $4.77 million deficit in FY2025, just for one year. We have a structural deficit that’s been growing rapidly for the last three years and will continue to grow if we don’t address the disparity between the fast rise in recurring expenses in the Northampton Public Schools and the city’s streams of recurring revenues. So, you know, that is really what we need to address.

And if councilors have questions about the slides that they saw, we can respond.

(36:39) MARISSA ELKINS: Yeah, so, first of all, I certainly don’t have any questions for our educators who joined us today. I defer to their expertise and their experience in the schools. This isn’t a question of, you know, what we would do if we were able to.  But that’s not the position we’re in.

I am wondering…  So my questions, I guess, are for Council Rothenberg and Mr. Simon. Do you have an idea of what it will cost to continue level staffing for two years? And do you know how much more it will cost the city next year and the year after?

QUAVERLY ROTHENBERG:  Yes, thank you, Councilor Elkins. From everything that I can see, as I said, the rate of growth for the school spending has been 4% for the past seven years. It was 3% for this year and 3% for the year before that, from all sources of spending. So that is the rate of growth of the schools every year. 

MARISSA ELKINS: We’re looking at a 17% increase to fund what we did this year over into next year. Can you explain how you — 

QUAVERLY ROTHENBERG: Yes, so, that is not the rate of spending of the schools. That is the rate of spending of the city in the city budget. You have been funding the schools from different sources and appropriations. As you like to say, one-time funds have been used. We are suggesting that through the use of operational audits, getting community input, setting a free reserve target that will make your budget bigger, you actually have room to fit the schools, as they are, squarely in your budget. And that growth will be a steady three to four percent, as it has been for seven years. You just need to get over that hurdle of getting them in there to begin with. And I suggest you follow the MAP to get there.

MARISSA ELKINS: Councilor Rothenberg, I mean, do you agree, putting aside whether or not it’s in the school department or elsewhere, that spending more money than the city brings in in revenue is eventually a deficit?

QUAVERLY ROTHENBERG:  Yes, I would agree, and I don’t see that you’re at risk of that.

MARISSA ELKINS:  Okay, well, we’ll talk about that just a little bit more. Do you…  So, and you agree that we have to continue to fund capital spending and infrastructure?  

QUAVERLY ROTHENBERG:  I think that it would be very important for the mayor and the councilors to make sure that all of the spending is in alignment with the needs and goals of the community. I cannot speak for the entire community on what should be your top priorities. I can only say that I know education is one of them.

COUNCILOR ELKINS:  Okay, a question for Mr. Simon. Can you explain the difference between an audit report and the quarterly annual reports that Director Nardi prepares for the city?

AL SIMON:  I cannot, because I have not seen those. I do not have access to all the information.

QUAVERLY ROTHENBERG:  The quarterlies are the variance reports: if we’re hitting our estimates. 

AL SIMON:  I don’t have over/under. I had only the publicly accessible information on the website. I’ve always found that the audit contains most of what you need to know. But I was curious about those quarterly reports, because that tells everybody where they think they’re going to be at the end of the year, and I am very curious to know what the town finance staff is projecting as the surplus for this fiscal year. They have a very, very good idea, at this point in time.

MARISSA ELKINS:  So, Mr. Simon, are you aware that there’s an entire web page in which we have the budget every year, going back, and every quarterly report that Director Nardi has presented on the website? It’s readily available. 

AL SIMON:  Well, that may be. I haven’t looked at everything that’s possibly available. I just know that — 

MARISSA ELKINS:  Can I ask you, so, it’s your contention that we have $50 million in cash to spend, under City control?

AL SIMON:  Sure. Now, what’s happened is: you put invisible fences around a lot of it. The “unassigned” is where the stabilization funds are, and those are invisible fences because the city has the authority to move that if it wants to, with either five or six votes on the council, depending on the fenced money that you want to look at. It’s all under City control, and the state recognizes that by putting it into a single category. The bond agencies recognize that when they list reserves as a single number, and the independent audit does as well. Bond rating also uses the “assigned” figures as well.

MARISSA ELKINS:  Okay, okay. So just backing up a little bit though, do you agree that like the city’s annual budget and the quarterly reports would be the source for looking at our projected revenues and our past performance over time?

QUAVERLY ROTHENBERG:  Council Elkins, the audits are merely the annual certified figure. What the quarterly reports are are the finance director’s quarterly reports. They are summarized every year. He has looked at 12 years, and they have been certified by an outside source, so I would say the audits are an even better source for the kind of work we’re doing and the kind of analysis we’re doing.

MARISSA ELKINS:  Well, I don’t know that I agree with that. The quarterly reports are meant to be the revenues and the projections against which we can measure. But in any case, Mr. Simon, you didn’t even look at them.  So, Mr. Simon, when you were Town councilor in Windsor, did you…  I mean, you went through the budget process. I mean, didn’t you rely on the city’s Finance director, finance committee…  

AL SIMON: Of course, I relied on the budget process, like you are. Of course, we did. And as the finance chair, we’d meet with the town manager and go over the quarterly reports. We’d meet with the auditor and go over the audit reports. We did all of that, sure. But I’m not in that position here. I’m a citizen trying to figure out why this city can’t fund its schools.

MARISSA ELKINS:  But you didn’t look at the actual budget, the reports?  Okay.  I have a few more questions, but if others have questions…  

QUAVERLY ROTHENBERG:  Oh, I’m so sorry, Councilor Elkins. I just think that I see what you’re saying. And I think those kinds of detailed reports are a great source for that committee that I’m proposing that’s going to be setting the free cash. Because in that committee, to look at that level of granular detail, that’s where you’re going to want to say, you know, “What kind of revenue is this? How stable is this? How much will market fluctuation affect this?” He’s looking at annual trends. But this one that’s going to set, year to year, what they think the free cash target should be should definitely be going to that level of detail. So, thank you for pointing that out.

(43:44) GARRICK PERRY: Yeah, I’m gonna keep it short. I just have a question. I’m looking at this MAP, and it looks like some idea is to create some committees and oversight things. What I have learned in my time in municipal government is that creating these things takes time. I’ve been told that this right now is a dire situation because it is a dire situation. And while I think that these are maybe some steps we can look at right now, I’m actually shocked that there aren’t any hard data or numbers to explain what we’re going to do in eight months next year.  And so I was wondering maybe if our finance director could explain how, when we take one-time funds — how that compounds. So, you know, the previous year there was a $2.3 million deficit, this year is a, I think, a $4.77 million deficit — and why spending is not gonna get us out of that. So perhaps we can get back to that. Director Nardi, are you able to… I just want to talk about the numbers and, you know, have a fiscal map.  

ALEX JARRETT: So, Director . . . Laura, could you make Director Nardi a co-host? I just want to talk about the numbers and, you know, have a fiscal map. Should be able to, um, okay, Director Nardi, welcome.”

(45:09) FINANCE DIRECTOR CHARLENE NARDI: So, if we look at using that budget, there is a $4 million deficit the first year, and then, if you look at the second year, there is a $4.8 million deficit, and then FY 2027, that increases to $5.6 million, and then FY 2028 to $7.5 million, and then FY 2029, $9.1 million. So, each time we’re using reserves and we’re not rolling it into the budget, that is going to compound, just like we started with, you know, $2.3 and we added $1.2, and this year was 8, and now with all the work that the mayor has done in order to provide this $700,000 additional money and we’ve got the stabilization and the Smith College gift, we’ve done a lot of work on the budget to push our revenues, and we’ve cut other budgets back or other priorities or other goals in order to make sure that the budget that she’s presented is able to fit into a $3 million override and make it recurring so that we can last four years. We can roll that in, as Councilor Rothenberg spoke about. That’s the really important piece, is rolling that in so then we can have moderate three to four percent increases going forward. And that’s the budget that the mayor’s presented; that’s what our budget can sustain. But the budget that the school committee has presented has significant shortfalls each and every year that the budget cannot just sustain.

(47:10) STANLEY MOULTON: Yes, thank you. I want to go back to the original question asked by Councilor Elkins of Councilor Rothenberg and Mr. Simon, because I don’t think we got an answer. I want to know what your calculations show that the Northampton Public School budget would be in FY 2026, using the level services budget that has been proposed for FY 2022 of $42.8 million, and taking into account the compounding that Director Nardi just spoke about. What have you estimated would be the budget that we’d be looking at for the NPS in FY 2026?”

QUAVERLY ROTHENBERG:  It sounds like it’s $44.8 million, so the increase over FY 2022 would be another $2 million. That was at 3%. I think the average was 4%; the most recent were 3%. I mean, I’m speculating based on your trends; I can’t do this work by myself. This is the work for the city to do.

STANLEY MOULTON:  Well, this is the work that, I believe, we just heard from Director Nardi, would result in…  

QUAVERLY ROTHENBERG:  If you don’t change your budget. You have to change your budget. You have to make more room in your budget.

STANLEY MOULTON: You’re talking about work that I believe I just heard Director Nardi refer to in her predictions about the steadily increasing deficit. So, she has come up with some specific figures. You’re saying that you would be looking for roughly a $2 million increase in the school budget for FY 2026 that would maintain the level of services?

QUAVERLY ROTHENBERG:  Yes, I’m looking for that. And I would suggest that you can increase the size of your city budget to accommodate that.

STANLEY MOULTON: I’m sorry, what? You increase the size of the what budget? 

QUAVERLY ROTHENBERG: City.

STANLEY MOULTON: City total municipal budget, correct?

QUAVERLY ROTHENBERG: Yes.

(49:42) DEBORAH KLEMER: Councilor Rothenberg, do you have any experience with finance from your schooling? I know you weren’t at the MMA meetings where we learned a lot about it, but I’m just curious about what kind of experience you have.

QUAVERLY ROTHENBERG: So, about my background: I am a retired classical musician. I retired when I was 20 years old. I had traveled the world as a child and specialized in that career with one-on-one training with mentors all over the world. So, when I learn new things, I learn from masters. And that is what I have done as a city councilor, to talk to DOR as much as I can. And I was just on the phone with our independent auditor Scanlon today. And I appreciate the expertise that Simon has brought. And I would love to learn even more from our Director Nardi. So, no: I’m a fast learner, and I’m doing my job as a councilor.

DEBORAH KLEMER:  It just seems like, since you have no professional experience, you’ve dismissed the advice of qualified city personnel, the financial director Nardi from the mayor. You don’t work with other councilors to try to figure this out; you outsource people to do this work. So it’s just a little confusing why you wouldn’t work with any of the other councilors and try to bring your plans to fruition, and, you know, instead having a meeting tonight, you know, a few days before the budget is…  We have to vote on it on Thursday. I mean, this has been dragging on. I just don’t understand what’s happening. 

QUAVERLY ROTHENBERG:  I’m not sure what you mean about not working with other councilors. I have a caucus of three; I can talk to one more councilor without violating open meeting law. My door is open if someone wants to come and be my fourth person.

As far as the date of this meeting and the scheduling of this meeting, I did not call for this meeting. My offer was to help the mayor make plans privately that she might be willing to get behind. The response of the six councilors who are not in my caucus and the mayor was to have this be a public meeting. So, I’m happy to help in whatever way is most helpful. I think this is the best way for me to actually be able to talk to all of you without violating open meeting law.

And I think it’s important to remember that we have until June 30th to pass this budget. And right now, we still have an unsolved budget, but I hope very much that next year we get an earlier jump on this. To return back to something that Councilor Perry said, that this would take a long time: Councilor Perry, what the DOR recommends is that we do this kind of work every single year. We need to learn how to do this. We need to start earlier, start in October, so that by the time we get to this point, we are all on the same page. That is my goal, and I hope that is your goal as well.

DEBORAH KLEMER:  Well, I’m a little confused by this whole presentation. This stuff was on Facebook for weeks and, you know, on the charts, the downturn in COVID, that’s what the surplus is for and why we have these funds and why, you know, the costs…  A lot of my constituents wrote to me, and your constituents wrote to me as well, and people from all over Northampton. And they are concerned about what’s going on here with this budget. They want us…  You know, they want the whole city taken care of. Like, at Community Resources, we just heard about the sidewalks that Councilor Dubs was concerned about. So it’s not just you, but it’s other people who are concerned about what’s going on too.

QUAVERLY ROTHENBERG:  Yeah, I agree with you. I totally take into consideration all of those in this solution, right. We don’t even probably really need to touch the savings. We really need to adjust our free cash. We don’t probably need to touch our savings long term. We just probably would decide…  I would think that this committee that I’m proposing would probably recognize that our savings are full already. I leave that to the committee to decide. So really, we’re talking about not generating as much free cash and just putting that instead towards operational expenses.

We also hear from people that, yes, they want sidewalks and they want flood pumps. We heard from Joe Comerford tonight that seems like there might be some promising work on flood pumps. But I too am concerned that our budget is not yet showing that kind of prioritization that we want to see in sidewalks, flood pumps, and schools. I think that’s another reason to have these Town Halls that I’m suggesting.

But, absolutely, everybody’s concerns about bond rating, reserves, city services, process — all of this is factored into what I’ve put forward today. The many different perspectives that people have and the many different concerns that they have are so important. That’s the whole point of my MAP, is that you need more parameters so that you come out with a more well-rounded budget. That’s what I would encourage the mayor to do; that’s what I would encourage the council to do. That’s my dream. I think we have the same vision.

DEBORAH KLEMER:  I mean, I wish there was more talk about your plans for the budget for this year.  Instead, you…  But I’m gonna just end it there. 

QUAVERLY ROTHENBERG:  Thank you. I think it’s a simple fix. I mean, we’re $2 million short. Fill that hole, get to work ASAP on FY 2026 planning, involve the whole community: that’s the plan. It’s very simple.

(55:30) MARIANNE LABARGE: I want to thank the panel, all of you, for being here and everybody listening to what was presented. I have to say that, Councilor Rothenberg, you did mention at City Council that you apparently were trying to get an appointment with our mayor; is that correct?

QUAVERLY ROTHENBERG:  Yes, it was.

MARIANNE LABARGE:  Was that appointment made?

QUAVERLY ROTHENBERG:  No. This was what I received in response.

MARIANNE LABARGE:  What did you receive in response?

QUAVERLY ROTHENBERG:  The instruction that I would be making a public presentation.

MARIANNE LABARGE:  Okay. Anyways, my question is: why weren’t these issues brought up to us councilors, about the idea that you had? That could have been brought up at City Council, that you would like a special meeting with councilors to try to work a path into finding a way to get the money.

QUAVERLY ROTHENBERG:  Oh, thank you. So, truly, I’m working as fast as I can. My sense as a new councilor here and reading the room of the politics here was that the mayor really enjoys and appreciates her authority. And I really wanted to give her the room to come up with a solution — and to keep encouraging the public to ask the mayor to come up with that solution, to say, “She can do it, she can do it. We’re just waiting for her to do it.” And then in the end I thought, “Maybe I can meet with her privately, maybe, because I haven’t seen her do it yet.” And then she asked for this public meeting, and I think it’s a great idea. It didn’t occur to me sooner, and I’m glad to know we can do things like this. I think it’s a great idea.

MARIANNE LABARGE:  I think it’s a great idea. But I agree with the councilor from Ward 1: you should have presented that communication to us councilors. And I think it would have been a great idea to have that communication, all of us councilors together, in a special meeting. That’s my idea with it. Anyways, thank you, Councilor.

And also, I would like to know from you, what is your plan now, since the voting is coming up on Thursday? What is your plan? How are we going to prevent an override?

QUAVERLY ROTHENBERG: Oh, personally and on behalf of Ward 3, I certainly don’t think we are at the point of needing an override. As I said, I think we have enough room in the free cash projections to just grow our budget, so I really don’t think we’re short on money or revenue right now, personally. And I think that most of Ward 3, which is more of a working-class ward, feels that way as well, from what I can tell from my constituents. So, I think we’re sort of putting the cart ahead of the horse when we talk about next year’s budget. We should see if we really have enough recurring revenue to fund everything, following those four steps that I laid out. And I think you will; but if you find that you don’t, you could look at an override.

And if you do start looking at overrides, I just want to say on behalf of Ward 3, it’s very important that if you’re going to say an override is for schools, you must legally restrict that money to only go to schools, because public confidence in Ward 3 and throughout the city, as far as I can tell, is at an all-time low. For years, we have been paying overrides and have been told they’re for schools, and yet here we are with the schools underfunded.  So, don’t mistake that and think this year people are going to go for it. I think this year, with these cuts, people are very concerned and they don’t necessarily think that this money will go to schools — otherwise, how did we get here? That’s a big question.

MARIANNE LABARGE:  I also think that our financial director should answer that question. Is that Prop 2.5 override going to strictly go to the public schools? So maybe our financial director, Councilor Jarrett, could answer that question, please. 

ALEX JARRETT:  Or perhaps Mayor Sciarra would more appropriately make the directive around where or the proposal where money will go.

(1:00:12) MAYOR GINA-LOUISE SCIARRA: Sure, so, for FY 2025, we’ve adjusted our approach. We’ve adopted more aggressive revenue estimates in order to increase the appropriation for Northampton Public Schools. Additionally, we are pulling $2 million out of the stabilization fund, so that to be able to roll that $2 million in and have it be recurring and available for the schools annually, not have it be one-time, that is what the override would be needed for, to have $2 million added to the school budget. We need a $3 million override; otherwise, in one year, we would have a hole again that would have to be filled with another override. Thank you.

ALEX JARRETT: Thank you Mayor.  I will call on Council Dubs then on myself as I haven’t asked a question yet, and then we’ll go to Councilor Elkins. 

(1:01:16) JEREMY DUBS: Thank you, thank you, President Jarrett. I just wanted to respectfully reject the notion that two other councilors have made, that Councilor Rothenberg did not try to work with the council earlier. If you all recall, a few weeks ago, both Councilor Rothenberg and I put an offer or put an order on the table for the council to discuss, for us to discuss the option to opt in, to give us all the opportunity to collaborate on this and talk to each other as councilors and work on it together. I believe that Councilor Rothenberg already tried to work with the Council on this, and it’s only now that she’s being singled out and people are pointing fingers as if she didn’t do this, as if she didn’t try to talk to us sooner. I just…  That’s not true, so let’s please not put that notion in the air.

I guess I just wanted to also mention that since Councilor Klemer talked about the fact that sidewalks are a big issue for me, I just want to mention that the DPW budget is being cut, so the city isn’t giving extra money for sidewalks right now, you know? So why are we comparing sidewalks to schools? I just…  I don’t understand that.

And yeah, just, I just want to repeat that Councilor Rothenberg has tried to work with us already, and I supported her on that, and I still support her efforts.

And I think that we should try to level fund our schools. I still think we have time. This is a crisis, and we have the power to fix it, to solve the crisis. Let’s just do it. Okay?  Thank you.

(1:03:24) ALEX JARRETT: So I wanted to touch on two things. One was the $50 million figure, and perhaps I’m not sure where that comes from. When I add up all of the funds, I get somewhere around $34 million, something like that. Many of those funds are in Enterprise funds, and as we know, the state of our water, sewer, and stormwater is certainly a very big concern, and many of those funds are for projects that will happen or are scheduled to happen that are critical and in many cases mandated by the state. So, touching our Enterprise funds, I think, would be very unwise.

  But I wonder if the mayor or Director Nardi could explain, like, where’s what is being shown in that figure that represents $50 million? Do you have an understanding of that? Does that make sense to you? And is that money that is available in some way, or is it money that is set aside for future projects?

(1:04:41) FINANCE DIRECTOR CHARLENE NARDI: So, the numbers in that infographic come from the annual audit, as was explained, and that’s completed by our independent auditor, Scanlon and Associates.  It’s from fiscal year 2023, and as Mr. Simon pointed out, there are unassigned and assigned numbers in here. 

The unassigned funds come from three sources. Those are from the stabilization, the general stabilization funds. So it doesn’t have anything to do with the Enterprise funds. It includes five of our General stabilization funds, which is the Fiscal, General, Capital, Climate, and what used to be the Opioid, at least in that figure. The opioid funds obviously have been revoked and they’ve been moved to a special revenue fund for the purposes of the settlement agreement. In addition to those five funds for 2023, it’s also part of the undesignated fund balance, or what we refer to as free cash. That number is in there as well. In addition to that, it’s also made up of the overlay account balance as of 6/30. 

So, the assigned fund balances are not readily available for use. These funds are for the unassigned. So you have the stabilization, which we talked about, which are special purposes, and the council voted those purposes. So we do have the general and the fiscal stability fund that is generally used for the operating budget. 

The designated fund balance, that’s the free cash that we talk about. That actually seeds those reserves and has seeded them, again, over 12 years. As noted, the policies that we have have increased our reserves, our revenues, we’ve exceeded revenues, and we have had tailings from expenses. And in part that was planned because, when that started, we didn’t have any reserves. 

The other piece of that is the overlay account, and the overlay is actually from the amount of money that we’ve set aside to pay abatements and exemptions, like the senior and Veterans work off. The money comes from there. In addition, at the end of the year, if we have taxes that have not been paid, those are liabilities that show up on this auditing report, and we need to show that we are able to pay it.

So, technically, this information that was pulled is not just our stabilization accounts, and the money is just not readily available. This report is not really a good indication of what we have available for operating costs. This report is actually designed for and the wording is used more for agencies that are looking at our bond rating or for doing bond rating that gives more credit because we have all of these different funds, like the overlay, and to cover our liabilities and our debt. 

We have the undesignated fund balance and we have stabilization accounts. So that’s what the unassigned is for. 

The assigned balances are not readily available for use because these are funds that are basically held over from the prior closed year from capital projects, budgets that would continue to be in the works. The encumbrances are tied to contracts and agreements, so they are projects we’ve already started to invest in. I don’t see how they would be available to use for other purposes.

So that is the $50 million, and it’s not just reserves that are available for projects.

(1:08:55) ALEX JARRETT: And the second question is the thought that Councilor Rothenberg put forward: that we use — we basically anticipate having a much smaller amount of free cash much in the future, which I hear that you’ve already done to some extent going forward. What are we seeing in terms of the amount of free cash that we anticipate funding our capital needs? I guess what I’m trying to get at is, you know, what could conceivably be available, not necessarily within our fiscal policies? And even if we decided to use some of that, how long would it take before we would run out of monies?

FINANCE DIRECTOR CHARLENE NARDI: So, yes, we have projected higher revenues to cover our expenses, so we do not expect as high free cash going forward. We started making those changes in FY 2024. I project, like $3.6 million in possible earnings towards the undesignated fund balance at the end of FY 2024. 

Again, we’ve talked a lot about the 3% to 5%.  That used to be 3% to 5% to generating free cash. DOR has upped that to 5% to 7% for most communities, because of the uncertainty out there, that they want to make sure communities have the flexibility to address issues. So we, as our policy, still try to target the 5%. 

As noted, our general fund stabilization fund is only at 4.8%, I think, so it’s just under the 5%. So the 3.6 is estimated like 3% of our budget for FY 2024-2025, as the mayor pointed out, in order to include that additional $737,000, which brings the total reserve that we’re using to $1.98 million is…  So I’m sorry; I lost my train of thought. So the $737,000 added makes $1.98 million we’re using in reserve, so we’re using $2 million of our fiscal stability, which will reduce that fund, which is only at 4.1 million now, significantly. 

So I’m not sure I captured the last question that you had. The last…  Yeah, the question is, you know, if we — how quickly would we run out, assuming we want to also fund capital needs? And I did some calculations. I don’t know how accurate they are, that it would be three years — less than that, if…  If the override doesn’t pass, it would be less than two years. So, yes, and I tried to do a graphic because I know in every budget book we provide the fiscal stability plan, which is a five-year plan, which shows each year how we are going to match or what our shortfall will be between revenues and expenditures. That’s in every single budget book. It’s also presented in the mayor’s January presentation, and I put together a graphic.

Laura, if I may share where I try to make that a little easier to understand, because there’s a lot happening in those spreadsheets, and I even have to sit and go through them very carefully. 

This slide shows our reserves as they currently stand. These are all the four stabilization funds. And this shows us using our reserves but continuing to fund capital, as the capital improvement program shows, and to follow our current policies.

The first year, we used the $4.0 million to fund our general fund budget. And then the second year, we only have $929,000. We’ve added some interest in there. We’ve also added a little appropriation from the undesignated fund balance or free cash, seeding these fiscal stability accounts as well. 

And we now need to use our stabilization account as well to meet the additional…  It’s $4.8 million, I think. And then the next year, we now have zero in fiscal stability, we only have $1.2 in stabilization, we now use $556…because, remember, stabilization — all these funds are also being used for capital projects. So, we don’t have enough in there to fund the shortfall created by this larger budget. So, we’re $3.8 million short and we don’t have enough to fund the budget. This is in FY 2027. 

So, I have, like you have figured out, that it’s really two years and it depletes all of our reserves. Then if we can in FY 28, there is no money in reserves, so we end up with a…  I think the $9.9 million is where we need forFY 2029. So, 2028, I believe, is a $7.5 million deficit.  Yeah, it’s right there, that we can’t fill. We have no more reserves if we do it where we don’t use — we don’t do any capital, we just use our reserves again.

We’re using that $4 million for FY 2025 and then we use…  We only have this much because we’re not getting as much revenue. Remember, the mayor’s budget proposal uses pushing revenues. So when we push revenues, we get less free cash. So now, we’re using the $4.6 million out of stabilization.

We’re using this amount to cover the budget in FY 2027. There’s nothing left in fiscal stability, and then there is money but not enough to cover the entire 7.5 million, so we’re short 2.6. This assumes we are doing no capital. I save some money for transfers, normal things that might come up during the year, but that is it. 

So, that has been my estimate that we could survive um two years and then really we can’t even get through 2028 even if we don’t do any capital. 

ALEX JARRETT: Thank you for that analysis. So, we have about 10 minutes left before targeted end time. I want to make sure to get to the folks who’ve raised their hands.  We’ll go to Counselor ELKINS, then Klemer, then Counselor Rothenberg.

(1:16:55) MARISSA ELKINS: Yeah, I actually have two questions for — well, a question for Director Nardi and then a question, I think, for Councilor Rothenberg. 

So, Director Nardi, I have noticed so you talked about pushing revenues and that’s why we’re not — we don’t anticipate as much free cash.  But…  So you’ve increased projected revenues to greater than 3% in local receipts, and I’m noting that that’s more than the Prop 2 1/2 increase. How do we do that? How do we increase revenue more than Prop 2 1/2 and what does what does it mean that we’re relying on more than property taxes? Can you tell me a little bit about that?  The other day…  If you could explain that again.

FINANCE DIRECTOR CHARLENE NARDI:  Yes, if I may share my screen again. So when you look at the pie chart that the mayor always presents to you, this pie chart shows a total budget based on the mayor’s presented budget, but it does show you that 68% of our budget of our recurring revenue is taxes, so, 68.6%. That makes up 83 million of this 122 million. So, if you think about that, 68% of that 91% of that is our taxes. Now I’m talking about our personal property and real estate taxes. So this big blue piece and this red piece right here, that makes up 93% of our total taxes, and that’s the amount we can’t raise more than two and a half percent. 

So basically, every time we go above, we are looking at this percent of the pie right here to make up that difference, and we are also including in that projection…  So that’s 7% left for taxes, which includes our real estate — excuse me, our motor vehicle excise, our boat excise, our cannabis, a hotel and motel…  And while they’ve been doing well, that’s a lot of pressure for 7% of the budget. The other pieces of the pie are charges for services, licenses and permits, fines and forfeits, and miscellaneous revenue, and that makes up about 133%. So, that’s this is the portion, the small portion that’s got to make up over two and a half percent. So we’re putting a lot of pressure on that, those small pieces of revenue, to make up the difference every time we keep pushing things above two and a half, because 93% of our budget cannot go there. We literally can’t go there.

MARISSA ELKINS: So, Councilor Rothenberg, you talked in your plan about Town Hall meetings and a budget and oversight committee. I guess my question is…  So, you know, we have in City Council — we have Finance. The mayor is charged by statute and the City Charter to have a particular role in budget process. School committee also has a role. So I guess I have two questions. One is: it seems like our meetings which are, you know, required by law to be open and accessible to the public and, you know, everybody has an opportunity to come and hear, and hear the quarterly reports and participate…  I’m…  I guess I’m concerned that we would have, like, parallel governmental activities, you know, kind of going on throughout the city. 

And then my second question is how would we choose who to participate in that and what do we do about folks who can’t participate in something like that or have limited ability to participate, and especially when it’s all kind of happening outside of where we’re required to have open meetings and that kind of thing?  So I just…  I’m curious to know how that would work.

QUAVERLY ROTHENBERG: Okay, thank you, Councilor Elkins. So, the reason I suggested the town hall piece is because it does seem like we are struggling this year with representation of the public. It seems like we are here in our council meetings often talking with Director Nardi and with the mayor as individuals who are trying to decide if they agree or disagree with her plans. When we are talking about following her plans, where she can’t see a solution that lasts more than two years that also fully funds schools, that tells me that we’re missing some input. We are missing input from the community about what their priorities are, because some of those things could probably be removed from your budget and your expenses. We are missing input from operational audits about where we could be more efficient, because again, that will remove expenses and make things more sustainable. We are missing conversations from our schools about what we want them to look like, so we’re letting them drop into the bottom fifth percentile of the state in a city that really values education. And finally, we are losing this very routine referral that goes to a budget oversight committee in other cities like Watertown, a very routine referral that happens at the beginning of every budget season, which is to set the target cash, because Director Nardi is right: the reserves don’t tell us what we can do with our operating budget; the reserves tell us what our savings are and help inform us when we set a target for how much we need to add to them. 

When you talk about how we’re going to sustain capital expenditures, you’re overlooking things like funding capital needs through grants, through debt exclusion, through your wonderful AAA bond rating that allows you to borrow, through overrides that are targeted for projects, through using savings, and yes, through potentially using free cash.

So what I’m hearing tonight is a lot of amazing questioning from councilors; and again, as I would say to the public, I am thrilled that we are talking about policy. Councilor Labarge, I’m sorry it’s happening so late in the season. It seems if we would follow this MAP, we could start this sooner. These are the kinds of conversations that we need to have in detail. These are not the kinds of conversations that we can have in one night with nine, ten or eleven people who are just thinking themselves. This is a community discussion. We need to find solutions for a budget that meets the needs of the community. The community is the city, legally, of Nortrhampton.

MARISSA ELKINS: So, the CIP (Capital Improvement Plan) already lays all of that out, 100% of it. If you go and look at it, the CIP lays out the funding for every single capital project, including debt exclusion, and lays it out for five years where it’s projected from. So, I guess I just wanted to point that out.

QUAVERLY ROTHENBERG:  And that is planned by a five-member committee.  Five people, and Councilor Elkins is one of them.  That is not democracy.

MARISSA ELKINS:  It’s certainly laid out and it is available for review and then it is, in fact, voted on. I don’t…  And also the CIP advisory committee does not make the plan. It is an advisory committee that the mayor is free to reject. But are…  I guess I’m just wondering: are you insinuating or implying that there’s some kind of self-dealing or improper — something improper going on with the way we do the capital improvement projects? 

QUAVERLY ROTHENBERG:  That’s not what I’m discussing tonight. What I’m discussing is that you need the community to weigh in on those priorities. 

MARISSA ELKINS: Okay, all right, that’s all my questions. Thank you.

ALEX JARRETT: Thank you. We’ll go to Counselor Klemer and then Counselor Rothenberg and then Counselor Moulton. Um, we’re coming up against the end of our time.  I’d like to extend for about 10 more minutes, given that we didn’t start our full hour of discussion until 8:25. So, I’ll should give a couple more folks chances to speak. So, Counselor KLEMER, hi, thank you. 

(1:26:24) DEBORAH KLEMER: I just wanted to address what Councilor Dubs responded.  And all the other departments stayed within their two and a half percent budget. And the DPW, they have a negative 1% increase because we earned funding two positions for this year that are not filled.  And Director Lascaglia is using some of the resources remaining from prior years due to vacancies. So, they didn’t lose money this year.

And as far as the opt-in, that’s not a discussion about what’s going on and all this planning for months. That was a whole separate thing. And you know, this is all…  This is done behind closed doors and, you know, that’s not the way to get things done. 

And the way this is happening, it undermines the trust and efficiency of the city’s leadership. You know, Director Nardi is an expert. She’s been doing this for a couple of decades. You know, she knows what she’s talking about. And I don’t know why you go to outside residents to get information. 

  Do you need a second, Councilor Rothenberg? 

QUAVERLY ROTHENBERG:  I’m ready, Councilor Klemer.

ALEX JARRETT:  Thank you, Councilor KLEMER. Did you have anything more? 

DEBORAH KLEMER:  No, I’m done. 

ALEX JARRETT:  Thank you. Okay, thank you. Let’s go to Councilor Rothenberg.

QUAVERLY ROTHENBERG:  Yes, I just want to reiterate that what I do as a representative is engage with the public. The public is not required to meet publicly with everyone. The public will have whatever venues they want to meet in where they are comfortable sharing their thoughts. I go everywhere from Joe’s Pizza to Historic Northampton to City Hall Chambers to my neighbors on the block. I talk to all different kinds of people, and where they want to organize and how they want to organize is totally up to them. I fully support grassroots organizing. 

What I’m trying to offer you is a way for you at City Hall to pull that public into your process, because this is a conversation about values and choosing what to fund, and this community wants to fully fund its schools. 

ALEX JARRETT: Thank you, Counselor Rothenberg.  Go to Counselor Moulton. 

(1:29:02) STANLEY MOULTON: I want to return to the subject of overrides passed and proposed and point out that if there are people in the community who don’t understand that the general overrides have benefited the schools, they have. In the decade or so that the fiscal stability plan that is funded by these general overrides has been in effect, they have provided a stable and predictable increase in the school’s operating budget that, as Councilor Rothenberg has pointed out, has been between three and 4% annually. That replaces what the mayor has repeatedly described as the prior decade of very volatile and unpredictable small increases or, in at least one case, a decrease in the school budget.  

Secondly, the money that has been raised through these overrides contributing to the fiscal stability, the general fiscal stability stabilization fund, has provided the $1.2 million that helped fill the budget gap in the current fiscal year and the nearly $2 million that’s being used to address the continuing budget gap for FY 22. 

So, I wanted to ask Director Nardi — you touched on this, I think, in answering Councilor Jarrett’s questions, but can you specifically address the notion that using free cash, undesignated cash, for operating expenses in FY 26 could replace the need for the $3 million override?

(1:31:06) FINANCE DIRECTOR CHARLENE NARDI:  So, I’m not sure I understand your question. So, if we continue to use our reserves, as the graphic that I showed before, if you’re applying just using free cash…  Free cash is going to seed all of our other reserves. So, if you use that, we’re expecting 3.6 million of new funds. We have 1.7 that has not been used, so that adds up to what, 5.3 million? I’m sorry; I can’t apparently do math on the spot in front of a crowd. But so we’ve got 5.3 million and we have a $4 million shortfall this year and a $4.8 million shortfall next year. So, we wouldn’t be having a lot of generating of the undesignated fund balance.

And the concern is how, as we move forward with projects that we need to do for climate change and for all of the ongoing projects and for dealing with our roads and for the borrowing and all of those kind of things under the Capital Improvement…  What would continue to feed those? So, if you start using — which we’ve already started to use…  We’re pushing our revenues. We’re going to generate less free cash as we move forward. Where’s the money going to come from after two years? Because, as you know, I discussed before, we quickly use up our funds. We would start eating away at reserves. We wouldn’t be regenerating them. And eventually, as I pointed out, this grows significantly. And by the year 2030, even if we do our…  You know, we’re ending up with an $10 million deficit that we need to address.

So I really, as our auditor has pointed out — and Councilor Rothenberg has mentioned that she’s spoken with Scanlon and Associates — as Tom Scanlon said to you at his meeting, he believes that the city’s policies have served us well. The graphic that was shown, we started in 2016 and we have added to our reserves. And where we are today, as he said, is a good place. We do have reserves. 

We have a plan to use reserves. You should never just grow reserves for the purpose of growing reserves. You should have a plan, and we do have a plan. We have a Capital Improvement Plan that goes on for five years. We have a fiscal stability plan where we actually project out growing revenues, growing expenses, and how we’re going to deal with them.

All of this planning happens, and we start that process by looking at them, talking to people, bringing forth in January the budget projections, revenue and expenses, forward to you in January. And we also start thinking about how we fit in the budgets. Each of the departments look at their budgets individually and how they can fit into the parameters of the fiscal stability, because we’ve made a promise when we go out for an override that we are not going to do so again, that we are going to adhere to fiscally responsible increases so that we can provide city services in a responsible manner.

STANLEY MOULTON:  So, I just want to be clear then: while we could use the 3.6 million that you project in free cash to apply to the operating budget for FY 26, that would begin to affect the city’s ability to finance many projects, many initiatives, many of our goals across all city departments if we did that instead of placing an override on the ballot?

FINANCE DIRECTOR CHARLENE NARDI: Yes. And if we waited, because it’s all interconnected…  And you start pushing one, it affects, you know…  It affects the other issues or the other processes that we have. They’re all interconnected. And if we wait, that override has to…  When we eventually go out for an override, it has to be larger because that deficit is going to grow. So 

STANLEY MOULTON: Thank you, I’m done. 

ALEX JARRETT: Thank you, Counselor Moulton.  Are there any other councilors in this second round who haven’t spoken who would like to before I go to Councilor Rothenberg? Okay, seeing none…

QUAVERLY ROTHENBERG: Yes, I would just like to close by saying that I think that this presentation and those comments from Director Nardi are a great example of why we have checks and balances in our government. Her plan, while one of the financially responsible ways to do things, is not a socially responsible way to do things. We have many financially responsible paths that we can take.

To let you know what Scanlon said about our reserves: he says he likes about 20% of our operating budget. We have 30%. And to let you know what the DOR said when I told them we have perpetually put 5% away, 5% away, 5% in free cash, they said, quote, “That makes no sense.” They do not recommend 5% as a one-size-fits-all. They recommend a range from zero to 14%, depending on what your goals are.

Our fiscal stability plan was made at a time when we were in the red. Its purpose was to create savings. Our savings are overfilled. The DOR says that every single year you need to set a new target for your savings and your free cash. 

If what I am hearing from Director Nardi is that there is an intent to use the free cash and the reserves for all kinds of projects that the public doesn’t know the price tag of — at the expense of fully funding our schools — that is not something that this mayor was elected to do, and that is not something that any of you on city council were elected to do. The mayor ran on funding schools. That is what this council is charged with: finding a budget that does. We have to do that. We have about 10 more days left to do it. 

I am suggesting to you that you should be more engaged as a council in making plans and choosing plans, because your Finance Director works for the city, works for the people of Northampton. It is her duty to take our feedback and come up with a plan that meets our needs. And our needs are for our children to have educations, for our sidewalks to be traversable by people with disabilities, for our flood pumps to save us from floods. I don’t know what other kinds of projects are planned and what kinds of price tags they have. I know that the needs of my people, which people I represent — I stand in their shoes before you today as thousands of people, their voice — this budget does not meet their needs. 

You have a way forward. You have a MAP. It’s very easy. Operational audits will make you leaner. Picking the priorities of the people will make you leaner. Choosing the targets of your schools will help you build the city that we all want to see. You can do this. You can absolutely do this. You have the expertise. The mayor has the expertise, and the Finance Director has the expertise. What is missing are the values of the people, and they must be part of this conversation. Thank you.

ALEX JARRETT: Thank you.  I would like to give Finance Director Nardi a chance to respond. 

FINANCE DIRECTOR CHARLENE NARDI: If the mayor wants to speak first, I’m happy to allow her to do that. 

(1:39:36) MAYOR GINA-LOUISE SCIARRA: Sure. Thanks. First, I wanted to say that I’ve never seen DOR say anything other than you should have policies that are consistent and stick to them, not that you should change them every year. 

And I will just say, you know, I asked at the prior meeting what the plan is for eight months from now when the deficit is even larger, and I and others called this meeting in the hopes of hearing what such a plan would be. You know, discussions of different budget processes are interesting, and maybe they have merit, but it’s not a plan to deal with the very large and growing systemic deficit that we have right now and deal with it before it erodes our fiscal foundation. And I’ll hand it to Charlene. 

FINANCE DIRECTOR CHARLENE NARDI: So, yeah, I just wanted to clarify. So, in speaking with Scanlon and Associates myself, they do recommend that we keep our reserves 20 to 25% of our operating budget. Right now, we have 20%, or as of the end of the year for FY 2023, we had $22 million in stabilization, which is 18% of the budget. So, we have not hit 20%. 

We do have financial fiscal policies that we actually redid when I arrived here. It was a project that Susan Wright started, and we worked with the UMass…  What, am I missing the words? We worked with an outside contractor who helped, went through our policies. They were outside financial people who worked in other cities. They were very impressed by our policies and how they work and operate.

And I will go back to what we were told during our audit, which is our financial policies have led us to being a financially healthy community. And I do understand there are values here and there are a lot of priorities for the city, but my job also is to warn you when you try to make a budget that is not sustainable over multiple years. 

And using reserves on a continued basis is not a plan. It just pushes the issue, the structural deficit or shortfall down further down the years and just makes it larger. So, as a financial director, it is my job just to warn you that that is a dangerous place to go. Thank you.

ALEX JARRETT: Thanks, everyone. I want to respect counselors’ time. We’re already gone about 15 minutes over. I want to thank Councilor Rothenberg and the panel for the presentation, for the engaging discussion that we’ve had.  And we will take up the budget this Thursday, 6:30, starting at 6:30 PM in Council chambers and on Zoom. And I invite folks to come and give public comment. So, thank you all. And I would entertain a motion to adjourn.