The first quarterly override memorandum of agreement report was presented on Wednesday, Oct. 28, at the Select Board (SB) meeting. This was a very important milestone in terms of the many commitments made by the SB, School Committee (SC) and FinCom in selling the three-year, $15M override. This specific commitment stated: “Beginning in FY27, the Town Administrator and Superintendent will report at least quarterly to the Chairs of the Select Board, School Committee, and Finance Committee regarding the Town’s fiscal position, including projected revenues and expenditures for the coming fiscal year.”
It seems to me to be a very important and essential report. However, it wasn’t even the first item on the SB agenda. It was buried deep — item 10 of 17. Just after the apparently more important topic of “Street markings – Pleasant and Ocean.”
This first quarterly MOU report doesn’t exactly do what was promised. But it is a good start. It should be called the Marblehead Over/Under budget report. The 17-pager, developed by Molly Teets, the new FinCom chair, is very polished and reflects the work of a professional. In my opinion it is much better than any presentation produced by Thatcher Kezer (TK) or Aleesha Benjamin (AB) in the past in terms of accuracy (no errors), understandability and overall visual quality. Its preparation by a working group that included members of the SC, SB, FinCom and TK, but not quorums of these individual boards, is the basis of an open meeting violation complaint filed by the attorney, John DiPiano. I may comment on this in a future column.
Highlights of the report include the following:
Department spending is under budget
Marblehead only has an annual budget, not quarterly, let alone monthly. Quarterly budget performance analysis is based upon a “peanut butter spread (PBS)” of the annual budget equally onto four pieces of hot toast — Q1, Q2, Q3 and Q4. This PBS methodology is reasonable since about 80% of the annual budget is regularly occurring personnel costs including salaries, wages, health insurance, other benefits and pension obligations.
Q1 performance is deemed under budget if 25% or less of the annual budget is consumed. Across six departments — general government, public safety, schools, public works, human services, and culture and recreation, the range of annual budget consumption (ABC) ranged from 11% for schools to nearly 25% for public safety. School spending is seasonally lower (11.1%) because teacher payroll drops in the summer months. There was no total ABC percentage for these six departments in the presentation. But from the details I calculated it as nearly 15% ($11.5M spent in Q1 of the $77.4M annual budget).
Other general government spending in the areas of health insurance, retirement benefits and similar expenses is in line with expectations
Another grouping included other general government expenses including retirement assessment, reserves, workers comp transfers, health insurance, other insurance premiums, Medicare, unemployment and other similar expenses. Many of these expenses are paid in full at the beginning of the year. Overall, the ABC for this group was 46% ($11.5M spent in Q1 of the $24.8M annual budget). Health insurance, the largest yearly expense in this group at $16M, has an ABC of 24%.
Overall, the Q1 ABC percentage was 22.5% for all groups. ($23M spent in Q1 of the $102.2M annual budget).
Hiring is definitely under way
The override funds 16 new positions. Six — 38% of the 16 — were hired in Q1. The status of the other 10 positions: one person selected, four positions in recruitment/interview process, five positions — are in job description development.
Other topics in the presentation
Leadership changes, department responsibility changes, health insurance cost savings and senior property tax exemption were highlighted in the presentation.
What’s missing?
Revenue analysis. While promised, this data and analysis is completely missing from this first MOU report. The report and analysis should include total revenue and breakdown by category – property tax, excise tax, meals and hotel tax, user fees, permits, investment income, etc.
Large, unexpected expenses. As a mentor once told me, “Surprises should only be for birthdays.” Unanticipated expenses of more than $25,000, for example, should be flagged. In Q2 this might include TK’s retirement party including transportation down Washington Street, the worst street in Marblehead, from his Abbot Hall mayoral office before he heads off in the early sunset to home in Amesbury. But probably not.
Future reporting dates. The quarterly MOU Report should be elevated to the same status level as the annual “State of the Town (SoT)” presentation. The dates for the next 3 quarterly reports (and the SoT) should be placed on the Town calendar ASAP. It is reasonable to have the report presented at an SB meeting, but it should be the very first agenda item.
The report was dropped into the SB “folder” in the Document Center on the town website at 3:49 in the afternoon of 10/28 right before the meeting. In my experience, this was the first time a report was made publicly available on-line before an important meeting. The SB needs to continue this practice. While SB agendas for all meetings can be found on the town website, timely posting of SB meeting minutes is not being accomplished. The last SB meeting minutes posted were from their summer retreat on 7/24 – over three months ago. The 9/23 memorandum documenting SB FY27 goals and discussed at the 9/23 meeting is not available on the website. The SB needs to set an example in the timeliness and thoroughness of their communications for other boards to follow. The good news is that “town-wide communications” is in fact a SB FY27 goal area — number 11 on a list of 13. But how could you know that?
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 served on the Town Charter Committee.
