Marblehead has a “structural deficit.” The late comedian George Carlin would have a field day extrapolating the meaning of these two big words. No, it doesn’t mean that Abbot Hall, the Old Town House or the Lee Mansion are in danger of falling down. No, it doesn’t apply to our deficit of affordable housing structures for young families and seniors. Simply put, we are living beyond our means. We have an ongoing town budget deficit. Taxes, fees and grants are not enough to cover our expenses. We have been borrowing a diminishing amount of a budget surplus generated in prior years called “free cash” to cover our apparent extravagances. Or are they extravagances?
Recognizing the looming possibility for a significant budget override in FY26 starting July 1, 2025, Fincom chair Alec Goolsby proudly announced at the July 24 Select Board sitting that Fincom had already started the budget planning process. This is some three months earlier than last year. Fincom’s goal is to develop a longer, more detailed forecast covering the next three to five years. Their initial focus would be on personnel costs (salaries, benefits, insurance and pensions) representing 83% of the FY25 budget. The “traditional” budget process entails defining a “level services” budget and meeting with town department heads to understand their FY26 needs and beyond.
While getting started early on the FY26 budget is admirable, the term “level services” is inwardly focused. Like looking only at your belly button to decide where to go next. And maintaining “tradition” in the budget process has no role in operating a modern town government.
The town is a business. It competes for residents and businesses with other towns. The competition is based upon the services offered (schools, police, fire, DPW, trash, etc.), the cost of residence (taxes and fees) and the availability of other amenities such as beaches, parks, waterfront access, presence of family and friends, businesses in town, traffic to, from and within town, volunteer opportunities and overall vibe. Crisis in a town is not attractive. Businesses also evaluate the presence of target customers.
The very first question in the budget process that should be answered: Is Marblehead right-sized? Asked another way, does the town have the appropriate resources in terms of personnel and money for operating and capital expenses? Does it have too few employees, does it have too many employees, in which departments?
Benchmarking competitive towns
I definitely do not know the answer to this question. But it doesn’t appear that anyone in town government is asking the question let alone trying to answer it. But it needs to be answered before asking the voters to support a significant override. This question needs to be answered on a department-specific basis — schools, police, fire, DPW, etc.
Since the schools have the largest budget — 41% of the town’s total — it makes sense to start there. Back in April, the School Committee pronounced its “vision” for Marblehead to be a “model school district.” But they still have no qualitative or quantitative definition of what that means. There is no benchmark data comparing Marblehead to comparable towns in the areas of student academic performance, curriculum used, cost per student, student to teacher and staff to teacher ratios, teacher salaries, teacher satisfaction, student satisfaction, etc.
Benchmark data comparing Marblehead to comparable towns would also be needed for the other departments. Cost per resident and household can be easily calculated. But each department has unique metrics that should be understood. Department-specific metrics should be developed in conjunction with the department heads. For example, in the Police Department, these other metrics might include the cost per registered vehicle, officer to supervisor ratio and officer to police vehicle ratio. In its annual town report, the Police Department comprehensively tracks numerous activities such as medical calls, property checks, arrests, parking violations, etc. Calculating the ratio of these activities to officers and the historical trend might be insightful.
The income side of the budget also needs to be evaluated. The percentage of funds coming from various taxes, fees and grants would be needed for comparison. This analysis should also include the underlying assessed value of real estate and other property.
How to get a benchmark study done
What is needed is a multiclient study of several Massachusetts towns comparable to Marblehead. While we all believe that Marblehead is truly unique, in many ways it is not. Other towns have schools, police, fire, etc. Comparable towns would be similar in terms of the number of residents, households, school-aged children, housing stock composition, in-town road mileage, income, waterfront presence, etc. The comparable towns would agree to share data on the metrics described above. Since Marblehead is unique in some ways, some interpolation of results would be required for drawing conclusions.
This study could be conducted by the individual town departments if they were underworked or an egregiously paid consulting group for all departments. Alternatively, Marblehead with its reputation for being a bunch of penny-pinching Yankees might enlist a business school program to perform the study as part of a semester-long project for course credit and food. Given how cash-strapped the town is, this may be the best path forward.
From this study the town could assess whether the town is right-sized or not. Cost reduction opportunities may be uncovered. However, if more money is needed in a dreaded override the voters would understand not only HOW MUCH money is needed but WHY.
James (Seamus) Hourihan was born in Marblehead and is a MHS graduate. For 35 years, he worked in finance, marketing and executive management roles at high-tech companies. He has lived here full-time since 2009 and currently sits on the Charter Committee.
