Building Plan Would Squeeze Budgets And Force Staff Cuts

Photo: caes.osu.edu

A financial plan to fund four major building projects — an elementary school, fire station, public works facility, and Jones library expansion or repair —  by 2026 was presented at a recent Finance Committee meeting by Finance Director Sean Mangano and Town Manager Paul Bockelman (Indy report here). Key to making the plan work are a number of belt-tightening measures, the most striking of which are severely-constrained operating budgets for all town departments in the coming years. This is because a larger percentage of property tax revenues (10.5%) would be needed, at least for the next decade, to pay for these major capital projects while still retaining some funds for ongoing capital needs. The town has historically sought to use 10% of the tax levy for capital projects, although it has seldom achieved that goal. 

In the current fiscal year, FY21, due to the financial impacts of the pandemic, the percentage of the property tax levy dedicated to capital was cut to just 5% (about $2.8 million), causing planned investments to be postponed and increasing the backlog of unmet needs. For the fiscal year that begins in July (FY22), the allocation is proposed to be 8.5% (about $4.6 million). This jump in capital allocation, coupled with the reduction in revenues due to the pandemic, means less for operating budgets. 

Town departments have been asked to develop FY22 budgets with only a 1.5% increase over the previous year, an increase insufficient to maintain level services since the costs of providing those services increase by about 3% annually due to inflation, contracted cost-of-living increases, and other variables. That means cuts will be necessary, and gives a preview of what we might see in the next couple of years as the percentage allocated to capital is proposed to further increase to 10.5% of the levy. 

For the regional schools, the FY22 cuts are estimated at $1 million and are expected to result in the loss of 16 full-time-equivalent positions. Among the list of proposed cuts are: a Family Center outreach staffer, HVAC facilities specialist, bilingual psychologist, high school dean, and cuts to the art, dance, and PE/health programs. School Committee member Peter Demling noted that program cuts tend to be permanent.

For the elementary schools, the FY22 cuts are estimated at $516,000. The list of cuts will be presented at a budget hearing on March 16th. 

Reductions will be necessary across all Town departments, including fire & emergency medical services, public works, the libraries, and information technology. Similar levels of reductions would be needed in additional years as well if, as expected, operating budgets are limited to 1%-1.5% annual increases.

In addition to limiting the growth of operating budgets, other financial measures would be required to pursue the four major capital projects in a 6-year period. These include: a debt exclusion override for the school (which will raise property taxes for the life of the loan, if approved by voters); significantly lower budget caps for the fire station (from $24m to $15m) and the public works facility (from $38m to $20m); use of $4.6 million of reserves; and allocating only $2.8 million of the capital budget each year for ongoing needs, which is considerably less than has been used in recent years. Not mentioned explicitly is that other major capital projects (athletic fields, Crocker Farm elementary school renovations, Senior Center, etc.) would likely be shelved for an indefinite period. Also not noted are increases to water and sewer rates needed to fund around $20 million in capital expenditures for the water and sewer systems. 

Mangano included in his presentation the strategies available if the Town could not maintain 10.5% funding for capital. They included: allocate less to ongoing capital, allocate less to operating budgets, use more reserves, and/or request a second debt exclusion override. Other options could be spacing the projects out over a longer time to limit the overlap of peak debt repayments, or further reduce budget caps, although it is not known whether even the proposed caps will allow for buildings that meet the needs of the fire and DPW departments.

Now that the impact on future operating and capital budgets has been presented, residents can weigh in and share their priorities and opinions with Town Councilors by email, by attending a public meeting, or through the new online public engagement tool

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15 thoughts on “Building Plan Would Squeeze Budgets And Force Staff Cuts

  1. You’ve written here about how in order to fund all 4 of the main capital projects in a near-time frame, there will be budget caps and construction costs will need to be cut for the new fire station (cost previously estimated at $24m; budget cap proposed for $15m) and for the new public works facility (cost previously estimated at $38m; budget cap proposed for $20m).

    I am curious if Amherst officials have developed, or starting developing, plans for what those new buildings would look like under those reduced budgets. What will be left of the new buildings? and will they still meet the Town’s, Fire Dept’s, and DPW’s needs? Are perhaps some components of the plans that could be left out now without adverse consequences, and then funded at a later date, if/when funding is available at that time.

    I also have concerns about the decreased allowable growth (1.0-1.5% annually) in operating expenses in order to help fund the capital projects. The Federal Reserve has estimated inflation alone as being over 1.5% for the next few years. The estimates are 1.8% for 2021, 1.9% for 2022, and 2.0% for 2023. Another measure of inflation, the Consumer Price Index, shows CPI growing by over 2% each year between 2020 and 2025.

  2. Town Manager Paul Bockelman and Council President Lynn Griesemer have responded to similar questions by saying that ALL projects MUST come in under cap, that the cap will have built in a 10-15% cost overrun contingency, that project managers will be hired to insure that projects remain within the cap, and that once the overall plan is approved, individual projects will have to go back to their designer to re-design plans if necessary to bring projects within the cap. I too find the numbers in the model to be not credible and I would like more information BEFORE the vote on how we can build a firehouse for $15M or complete the Jones expansion for under $35.8M when that estimate is based on 2019 construction costs. I have lived in MA long enough to remember that the Big Dig that came in at a cost overrun of about 190%. Seems to me it was a similar story for the UMass parking garage though I can’t find the numbers for that one. Recently at UMass Boston a new science center came in at $18% ($28M) over budget and a new classroom building at $17M over budget. https://www.bostonglobe.com/opinion/2017/04/11/umass-didn-heed-warnings-construction-costs/Z1hrlZ1forjVkeaKT8KBEL/story.html
    When I arrived here in the late 70’s, I was told that cost overruns were routine for state funded building projects. So I am not assuaged by assurances that project managers guarantee that projects stay within budgets.

  3. I’m still waiting for Ms. Cunningham and the other naysayers on this website to answer the question: what is the cost of doing nothing? Are there no costs associated with that? How is it consistent with fiscal prudence to reject 14 million dollars in state income tax and sales tax revenues paid year after year by the citizens of the Town, and send that money somewhere else? WHO is going to pay to fix these buildings if we don’t? Someone will have to.

    I’m sorry…. but the local history that The Party of NO on this website wants to write appears to be this: “as borrowing costs were historically low, as the buildings were deteriorating, as we continued to spew carbon into the atmosphere, as we were offered millions in state grants (our money, after all) to help us defray the costs, after we recruited volunteers to spend hours and hours and hours studying, deliberating, and requesting public input, WE, the generations born after World War Two, through a minority of our elected representatives, decided to sit on our hands for DECADES……because we thought that somehow, some later group of people in town would take care of it for us, later on down the line.”

    Thank you for providing a forum for this kind of dialogue.

  4. Contrary to what Mr. Morse infers with his provocative rhetoric and name-calling, there are more alternatives to any plan than “doing nothing” and certainly I would advocate for action that is more within our means and more suited to our needs. The carrot of a grant has warped Town thinking, time and time again. These grants, with significant strings attached and requiring a hefty commitment of Town funds, often result in projects that are more than we need and cannot afford. Before applying for grants, we need to set priorities and budget caps so that project costs don’t spiral out of control.

    I see that Mr. Morse likes to reflect back on a divisive time in the town’s recent history when the school project failed to move ahead. While I would prefer we focus our energy on what we can agree on in the present and future, I would like to remind Mr. Morse that it was a town wide vote that determined the final outcome of the previous school plan. Had the plan earned the support of 66% of residents, it would have moved forward. It was known to be extremely unpopular as soon as it was unveiled, and the School Committee at the time had an alternative available to them (670-student dual K-6) that had demonstrated support. Rather than choose the compromise plan with demonstrated support, they chose instead to gamble on the least popular plan and it (predictably) backfired.

    I would also inform folks that the alternative to that unpopular plan, the elementary school plan that is currently being developed, is infinitely superior, and may end up costing the town the same amount of money even though it will include a premium to meet Net Zero Energy standards (the estimated cost for an add/reno 575-student school is $33m, coincidentally the same amount the previous plan would have cost the town). This alternative is arguably better in every aspect: It will be a much smaller school (575 students rather than 750); it keeps the youngest and older elementary children together (K-5 grade span rather than splitting with grades 2-6 at Wildwood and K-1 at Crocker Farm), and it will be all-electric and a net zero energy building (as opposed to oil-powered).

    Regarding the library project, doing nothing is not the only alternative, despite what Mr. Morse would like to have folks believe. Renovating the existing building in a way that addresses accessibility and sustainability, replacing the gas-powered HVAC systems with electric, and reorganizing the space to make better use of the building, can be achieved for a cost to the town that is less than the expansion (perhaps $5+ million less), and on a similar timeframe. What that would require is a will and commitment from the library department, Trustees, and the Town to get right to work on developing designs for the alternative, and the Town Council to authorize the borrowing or decide to put it to the voters as an override.

    While Mr. Morse likes to assign blame for the enormous backlog of capital needs in town on people like me, instead I would suggest he look to those elected representatives that he admires so much and question why they have failed to properly maintain buildings, and when full replacement is necessary, why they have failed to develop plans that are scaled properly and within the means of the Town. Money does not grow on trees and we are all well-aware that Amherst taxes are already extremely high. Developing elaborate plans at unaffordable price tags will always get pushback from those “naysayers” (a.k.a. residents with common sense and awareness of the limited ability of Town residents to afford it all). Look at the DPW proposal – the estimate in 2016 was $38 million! Now the Town is saying they will be limited to $20 million. Look at the athletic fields estimate – $6-12 million! The library – $36 million! The fire station – $24 million! (Reduced now to $15m. This “Amherst Premium,” where every design must be as big and bold as possible, is unrealistic and unaffordable.

    We are not an affluent Town. As some Trustees like to point out, more than a third of the elementary school students are on free and reduced lunch. Many of our elder residents are on fixed incomes, living in homes that they could not buy now, and with property taxes they can barely afford. Rents are high and utility costs are going up (perhaps you read my recent writing about water/sewer rates). We cannot keep acting like we are a rich town and can afford all that we would wish for. Rein in those dreams and get back to reality. The first step is to rethink the library to be something within our means. It is just unfortunate that the Trustees didn’t do that in the first place.

  5. Toni Cunningham once again provides facts and figures to support her argument that Amherst taxpayers cannot afford the 4 building projects and address current maintenance needs. And Richard Morse’s reply it to call her and others questioning the costs, tax increases, overrides, shifting budgets and likely cost overruns “naysayers” and members of some “Party of No.” Mr. Morse provides no facts, no financial analysis–not even for his question about what is the cost of not building these buildings. He could try answer that question or offer a single fact. Could Amherst continue to use the library, schools, DPW and fire station with regular repairs and upgrades? Of course, and these costs can be estimated. But that would take time, research and analysis. Much easier to call people names to belittle their views. Harder to address actual facts and what they are saying. By dismissing and belittling people have worked hard to collect facts, analyze the details, offer alternatives, and have developed a different point of view–Mr. Morse demeans only himself.

  6. Alas the library trustees did not address public opinion–only that of the library director and employees–before applying for the State grant. Now the floor plans and building facades are faits accomplis, locked in stone, such that public opinion and review by Town Boards is only window dressing.
    Yes,I admit that my husband, a former Jones Trustee, and I went to all the scheduled meetings with the architects and trustees in 2016 that did result in architectural changes but one unhappy design was replaced with an equally unattractive alternative. The requested study for examining re-design and re-use of existing space was never done, and I doubt that all rooms with tables and chairs for adult scholarly endeavors will be used. I didn’t see a line item in the budget for purchasing all the furniture and computers envisioned nor insurance for protection of the Strong house from demolition and reconstruction vibrations.
    I agree that the Jones requires much resuscitation but I don’t think it needs to be the Ritz Carlton which unfortunately looks more like a cow barn replacing the 1993 facade. Perhaps Site Plan Review by the Planning Board, Review by the Historical Commission, Review by the Mass. Historical Commission should have happened far earlier in the process. I would like to think that, had all these things happened before the grant application was submitted, we might be much happier paying our hard-earned taxes for a more attractive project that suits the needs of the users. And to top it off, power has already decided that debt for this project can be subsumed under the tax levy while the much-needed replacement of the now 51-year old school is left cynically to the vagaries of a debt-exclusion over-ride vote.

  7. Thank you so much, Toni, for your insightful and honest look at the grandiose building projects, in particular, the plans for the Jones Library. Amherst is a small town with a limited tax base — we are not Cambridge, MA. It would be nice to have all these amenities, but the cost to our citizens would not be worth it. I live within my means, and expect the town to do so as well. Yes, I want to improve our facilities, but let’s have the sense not to bankrupt the community.

    Isabel Margolin

  8. Yes Toni and Isabel! While living in a very small apartment down town (for 12 years) we realized that we could not afford to buy or build in Amherst. Instead we did what we could afford. With the owner’s approval we took apart an unoccupied house across from us which was slated for demolition to make way for a commercial building. All the pieces were loaded on a flatbed truck and moved to Cushman. Eighteen months later, we received our certificate of occupancy. That was thirty seven years ago and, still here, we don’t believe that our house served us or our three sons any less well than if we had built or bought a showcase one. I have no issue with those who can afford to do such, we just knew that we couldn’t. Likewise, Amherst cannot afford the grand Jones Library vision, nor do we need it and all the increases to costs (e.g., parking, public safety) that will come with it during and after demolition/expansion.
    Rita Burke

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