Chairman's Statement, June 3, 2014

Town Council Budget Hearing June 3, 2014 Good evening. I want to recognize our educational professionals for the extraordinary effort each of them has put into creating the School Department budget document.  Their combination of thoughtfulness and expertise has helped develop a budget that is very specific about what it costs to serve our students’ needs, both legally, and properly. It is these professionals who make teaching and learning a reality for every child, in every classroom, every day.  We talk the talk—they walk the walk.

Because we have had so many public discussions about the School budget, I think most of those here tonight have heard many times over the themes of the crippling budget constraints under which our School Department, like many other municipalities’ School Departments, has labored during the past five recessionary years.  There are certainly many statistics and excel spreadsheets available on line for those who are interested.  If you want more than numbers, visit the schools, speak to the teachers and the parents, and make up your own minds about whether the schools currently represent the best our town can do.

I have looked at a copy of the Comprehensive Development Plan commissioned by the Town of Watertown, and I have read all 220 pages.  Most of it does not directly touch on the schools.  There is a lot of information and numerous recommendations about traffic flow and historic preservation and zoning.

However, in the section titled Economic Development, a mention of the schools appears in Goal 4.  Economic Development Goal 4 is: Align education and training opportunities with careers in the region’s growth industries.  And number A. underneath, elaborates: Ensure children and young adults are prepared to participate in the Town’s employment base.

In another section, that employment base is highlighted as heavily weighted toward many of the STEM fields (science, technology, engineering and math).  That is the employment base the Watertown schools are exhorted to prepare its students to enter.

We are not doing that.  We cannot do that.  We do not have the resources to do that.

Why?  First, STEM preparedness is cumulative.  Each step builds on a knowledge and skill base acquired previously. At the simplest level, if you can’t add and subtract, you can’t move on to multiplication and division.  With teachers spread thinly, working with large class sizes of extremely diverse learners, they are prohibited from addressing each particular child’s issue on a timely one-on-one basis. That student’s difficulties grow and hamper future learning.  The child begins to associate that subject of study with personal failure. The STEM curriculums, which build year to year on each previous foundational step, become less and less attainable for that student.  Without a sound, doors close for that student’s future.  Like tooth decay or a leaking roof, this is not a problem that resolves by itself.

Second, STEM teachers are expensive.  One way the school district has addressed financial constraints is by hiring good new teachers who happen to be at the bottom of the salary scale, because they are just beginning their careers.  However, in certain disciplines, which include the STEM fields, teachers are hard to find, and when you find them, they are not necessarily beginning their careers.  Physics and math, for example, are highly sought teacher specialties, and these teachers are expensive.

Third, in addition to specialized staff, STEM curriculum requires specialized equipment, consumable supplies, and uniquely configured workspaces. These are expensive curriculums, often requiring frequent professional development and annual goods and materials replacement to continue to remain up-to-date.  If you don’t have the funds to provide the qualified staff or the equipment or the lab to offer an engineering curriculum, then you try, as we do, to offer the after school Robotics team as a limited hint of what engineering might be, for a small group of hardworking students which raises most of its own funding.  At last night’s School Committee meeting, we heard a presentation about the Continental Math League success achieved by fifth graders at the Lowell School.  The group placed first in the nation.  Four students made perfect scores.  The Continental Math League team is funded by the Lowell PTO, not by the School budget.  I wish more students in the elementary schools could have access to this kind of program.

I would love to offer computer science and engineering courses in the curriculum. Many new STEM companies are coming to Watertown.  The Town Comprehensive Plan is very clear on that. Why shouldn’t our own Watertown students have a fighting chance to qualify competitively for employment and careers in these areas of Town growth?

The Town Comprehensive Plan clearly and correctly views the Town as one whole, with its many parts functioning together to contribute to the vision of a prosperous future.  The Schools want to play their part in that future.  There is a mutual interdependence between the health of the Schools and the economics of a successful town.  Our students’ families, our School District employees, our School Committee, are your neighbors, your friends and relatives, your customers, your co-workers and your citizens.  We want what you want. We are you.

Mr. Sideris and I are continuing our dialogue with each other, with our respective Council and Committee, and with our administrators.  We all recognize that the budget document you have before you tonight is a step, but not the final step, toward the goal of charting the wisest course to address our Town’s pressing school funding issues on a sustainable basis.  While I was preparing these remarks, I took a look at my horoscope in the Boston Globe on Saturday.  It read: Don’t expect everyone to agree with you when it comes to financial, legal or medical issues that you are facing. You may have to compromise in order to keep the peace and find a workable solution.  After nineteen years on the School Committee, I accept that to be true.  Understanding another person’s point of view is an essential part of working together.

We all want excellent schools.  The School Committee’s mandate is to tell the Town Council accurately and frankly what financial support our professional staff needs to provide a good education for our children.  The Town Council’s mandate is to tell the School Committee what funds the Town is able to allocate for that purpose.  The separation of these two spheres is specifically set forth by law, and allows each body to exercise control over the issues in and for which they have the most expertise and responsibility.  Both Council and Committee can be speaking their own truth, and not agree on a final number.  That is not anyone’s fault. That tension is what makes this issue so challenging. We both wish the Schools needed less money.  We both wish the Town had more money to allocate to the Schools

The School Committee will be meeting on Thursday, June 5,  at 6 PM, in the High School Small Lecture Hall, to consider a budget revision the Superintendent and her staff are preparing which is sensitive to the constraints on the Town’s bottom line, while remaining responsible for fulfilling the educational mission of the Schools.

I am grateful for the vast number of hours the Town Hall and the Town Council have given to the FY15 School budget. Thank you to those who were able to attend some of our meetings.  Thank you for engaging in many, many discussions in person, on the phone and by email.  In particular, thank you Mr. Sideris, who as Town Council President and School Committee member is laboring mightily to integrate the needs of two worlds fairly and creatively. That effort is ongoing even now. When the FY15 budget process has concluded, we hope these numerous conversations will continue as we consider future budgets, as a normal and collegial part of doing the business we all promised the voters we would do when we last asked them for their votes.

In successful municipalities, the schools and the town are partners working toward a shared vision. We have every element we need to reach that goal of partnership. Above all, here in Watertown, we are lucky enough to possess an extraordinarily precious asset, which we must not squander.  We are the beneficiaries of an engaged and passionate citizenry.  How fortunate we are to live here and serve them.

Eileen Hsu-Balzer Chair, Watertown School Committee

Letter to the Editor: Wilson Lowry

Town CouncilTown of Watertown Watertown, MA

June 1, 2014

Dear Councilors:

I am writing in the hope of clarifying issues surrounding Watertown’s pension funding decisions.

Recent media articles repeat the misleading claim, made by the Town Manager in the April 29 budget presentation document and again during the May 27 budget presentation, that moving the end-date for eliminating our unfunded pension liability from 2022 to 2019 will save the Town $32 million. This inaccurate claim leads to the false and damaging impression that the pension appropriations for FY2015 and subsequent years cannot be reduced because doing so would eliminate substantial savings. To the contrary, in order to realize $5 million savings by 2022 (not $32 million!), by 2019 the Town must make $10 million more in contributions than had been previously scheduled through 2019.

Before addressing arcane aspects of pension funding, we need to ask: Why is this important to the Town Council?

The misunderstanding about the $32 million has the effect that pension contributions have been inappropriately taken off the table for discussion, thereby avoiding any consideration of using the rare good news in the most recent pension review (valuation) as an opportunity to improve current town services. Prior to the completion of this 2013 valuation, the schedule used by the Town to fund the liability was already one of the fastest in the state: the projected full funding date of 2022 put us in a tie for fourth place among all governmental entities in Massachusetts. The new “fund to 2019” schedule will surely move us even higher in the rankings, suggesting that we prioritize pension funding more highly than do other towns with similar populations, budgetary needs, and cost pressures.

The problem of unfunded liability began with the inception of municipal pension plans during the early to mid-20th century because most towns and cities, Watertown included, did not properly fund for their future benefits before the 1980s. The current generation of taxpayers is already burdened by having to pay unfunded costs for previous generations’ pensions in addition to current costs. Shortening the funding period exacerbates this intergenerational inequity by concentrating the burden on a compressed subset of residents.

Finally, the urgency to revisit funding schedule decisions is due to a provision in Chapter 32, the state law governing pension plans: each subsequent year’s contribution must be 95% of the prior year’s contribution until the plan is nearly fully funded. Despite Watertown’s status as an early-funding town, we are subject to this restriction, too. The additional $1.6 million in the Town’s FY2015 contribution, which increases from $10.6 million in FY2014 to $12.2 million in FY2015, locks us into making payments of at least $11.6 million (95% of $12.2 million) for FY2016 forward. In fiscal 2016-19, yearly $1.5 million increases are also scheduled, bringing the FY2019 contribution to nearly $18 million.

Now we can return to the explanation of why adopting a shortened schedule that includes moving up $10 million of payments from fiscal 2020-2022 to fiscal 2015-2019 does not result in $32 million of savings... fasten your seatbelt!

As background, a pension plan promises benefits to retirees in the future, requiring savings now; “unfunded liability” arises when not enough money is saved for future payments. Unfortunately Watertown, like most cities and towns, did not begin “funding” (i.e., saving for) its pension plan until the 1980s. The pension plan is reassessed every year or two. Each new actuarial assessment (“valuation”) re-calculates the unfunded liability based on actual history of demographic changes and salary increases, refreshed projections based on assumptions for future growth in benefits, and updated asset values.

All these factors interact and must be taken into account together to calculate the yearly schedule of contributions that will lead to full funding. The liability includes benefits being earned by current employees who have yet to retire along with the value of all future benefits already earned by current retirees; meanwhile, a portion of the assets already in the plan are constantly being used to pay benefits to current retirees. Each time the Town resets its pension funding schedule, we must submit it to the state’s pension regulator (PERAC) for approval. These valuation reports are prepared at the end of each year and the new schedule begins the following fiscal year.

The key to this analysis is the difference between the 2012 and 2013 valuations. (Because of the lag in report preparation, the FY2014 appropriation is the same in each schedule; differences begin in 2015.) From 2012 to 2013, two things changed.

First, based on the 2013 valuation, the yearly contributions required to fund the liability over the period from fiscal 2015-22 would have been $27 million less than those derived from the 2012 valuation. This change happens because the 2013 valuation resulted in a liability that was much lower than had been projected in 2012. The good news was the result of a combination of several factors: the adoption of less conservative assumptions, slower than expected growth in projected benefits, and asset growth. Had we simply adhered to the schedule from the 2012 valuation all the way through 2022, the updated projections from the 2013 valuation show that the previously planned $114 million in scheduled contributions would have over-funded the plan by $27 million.

Second, in response to the 2013 valuation, the Town decided to move $10 million of contributions from later years to earlier years: from fiscal 2020-22 to fiscal 2015-19. Making contributions earlier allows for more time for investment returns to accumulate and therefore reduce future contributions, in this case a savings of $5 million. Put another way, adding $10 million to the previously scheduled $66 million in contributions over the next five fiscal years will allow us to reduce contributions by $5 million (not 32 million!) over the entire eight year period.

Needless to say, over-funding the plan is not on anyone’s agenda. In response to the favorable 2013 valuation results (the first change), the Town could have chosen to maintain the original funding date of 2022 and reduce total contributions by an estimated $27 million, from the scheduled $114 million to $87 million. Instead, the Town made the second change: we chose to adopt a new schedule that not only maintains the contributions for fiscal 2015-19 but increases them by $10 million in order to move up the date for full funding to 2019 (disregarding a small, residual liability for the Housing Authority). Total scheduled contributions (increasing until 2019 and dropping off steeply in 2020) for the eight years from 2015-2022 are now $82 million. The $10 million of incremental increases in contributions for fiscal 2015-19 produce almost $5 million of expected investment return over the eight-year period from 2015 to 2022. Therefore, the $27 million in reduced contributions and the $5 million in extra asset growth from investment return combine for a total reduction over the eight years from $114 million to $82 million.

It’s important to reiterate that most of the $32 million reduction in contributions is the result of the new 2013 actuarial valuation, NOT the shortening of the funding period. Furthermore, to achieve that last reduction through the $5 million of investment return over eight years, the Town must, in the next five years, direct an extra $10 million of revenue – over and above its previously scheduled contributions – away from other purposes. In FY2015, the pension contribution increases 15%, the largest increase of any material line item in the budget. In FY2019, the new scheduled contribution will be nearly $18 million, a 67% increase above the FY2014 contribution, or an average of 11% per year.

I urge the Town Manager and Town Council during this year’s budget deliberations to fully weigh the costs and benefits of higher current pension contributions against the costs and benefits of underfunding other crucial needs.

Wilson Lowry Fellow, Society of Actuaries 114 Marshall Street

C: Manager Driscoll

Letter to the Editor: Alyson Morales

To the Editor: Watertown Strong Schools has spent a lot of time focused on understanding the state of Watertown Public Schools. We analyzed data, met with town leaders and residents, interviewed administrators, and surveyed teachers. What we have concluded and have worked to clearly and objectively explain, is that the schools are at a crisis point. If left unchecked and underfunded, the problems will continue to get worse.

While the Town Manager’s current education budget has made many positive steps and is larger than it has been in the past, it will not address class size in any meaningful way. We need additional funding to cover new mandated (required by law) and new core teaching staff at a minimum to address the problem. While we believe additional staff is needed in the areas of guidance, STEM, music, etc., our priority must be adding core classroom teachers.

Throughout our work to advocate for Watertown’s students we have heard many arguments against additional funding. I have been asked to respond to several of the more recent statements made. All of the information presented below is sourced from the Department of Elementary and Secondary Education and the Department of Revenue.

Watertown spends less on education because we have fewer students to educate. This is not true. Watertown doesn't spend less on education because we have fewer students. When Watertown is compared to other towns with similar student enrollment (+/- 500 students) we are at the bottom in terms of spending. We spend 49% (including insurance and retirement) of our budget on education, while other towns with similar enrollments spend 67% on average.

Watertown has better student to teacher ratios than its neighbors. This statement is misleading. While true, one has to look deeper for a better understanding. Watertown has a much higher population of special education students than its neighbors (WPS 21.9% vs 19.4% in Newton vs 13.9% in Arlington vs 9.2% in Belmont). These special education students often have classes that are small and range in size anywhere from one to twelve students per teacher. When a town has this high of a population of students with disabilities, it skews the top line ratio and makes it look better than it is. Elementary class sizes right now are as high as 28 students per class.

Watertown spends more per pupil than its neighbors is also misleading. Again, while true, one has to go beyond the surface to get to the truth. Watertown spends 33.4% of its operating budget on special education, which is more costly and therefore drives up the total per pupil expenditure. This is much higher than its neighbors, again because of our unique student population and needs. Newton spends 25.2%, Arlington spends 22.5% and Belmont spends 21.8%. Because of this, Watertown looks better at a top line when compared to its neighbors.

Many of these issues are not obvious to those that have not been spending months looking at all of the information. I urge residents to weigh all of the information and make up their own mind. Go to watertownstrongschools.com and take a look at our documents. All of the data is objective and sourced. There are no smoke and mirrors. We are an independent group that is not on “anyone’s side”. We continue to advocate for all of the children of Watertown, special education and general education alike.

Alyson Morales Chandler Street

Letter to the Editor: Candace Miller

Down to the Wire for WPS Dear Editor,

I am the mom of a current and soon-to-be WPS student, as well as a public policy researcher who has worked for two decades across four continents with colleagues in government, business, and academia. I became focused on WPS when I realized that across the fifth grade, students were receiving minimal feedback, spending more time memorizing worksheets than engaged in project-based learning, and experiencing increased behavioral problems. Examining MCAS results, I noted that 20% of WPS students who were proficient in math in third grade, no longer met minimal standards by fourth grade, despite the fact that statewide, students perform better from year to year. As a mom, I am deeply concerned to see Watertown children falling behind, disengaged, and exposed to growing behavioral issues.

Watertown Strong Schools formed as parents came together, sharing concerns about increasing class sizes, overburdened teachers, and a decline in student wellbeing.  WSS focused on understanding the situation at WPS, the budget process, and school and town dynamics. We analyzed data, examined budgets, met with leaders, attended town meetings, held community meetings, interviewed administrators, and surveyed teachers.

The data clearly demonstrate that WPS has declined over the last decade forcing administrators to request a sizeable increase for FY2015. WPS is on the edge of compliance for special education, has inadequate staffing, overcrowded classrooms, insufficient guidance staff, and serious safety concerns. In classrooms with 28 students, teachers are unable to implement the differentiated learning approaches needed to motivate students and keep them out of trouble.

The primary problem is that WPS are deeply underfunded. Resources have not kept pace as state mandates have expanded and student enrollment has grown with greater percentages of low income students, English Language Learners, and students requiring individualized education plans.

In 2014, administrators prepared an industry standard budget that articulates WPS needs across schools, grades, subject areas, and special and general education. Increased funding would ensure that WPS are in compliance with federal requirements and state accreditation standards, reduce class sizes, and improve school safety.

We hoped that by sharing accurate data, understanding local leaders’ perspectives, and interacting respectfully, we could build relationships and repair communication so that town officials would fully understand what our education professionals need to operate safe and effective schools.

As we move to the final stages of the FY15 budget process, I am pleased that our town has a better understanding of WPS. I am encouraged by leaders who are working tirelessly to bridge the gap between the town and WPS. I am concerned as other town leaders—elected and appointed—still refuse to discuss facts, continue to discredit WPS administrators, and assign blame for problems created years ago, rather than identify solutions. The old arguments that we debunked using accurate data resurfaced last week in a letter that defended the behavior of town leaders who refuse to acknowledge facts so they may continue to underfund WPS. I urge readers to get informed, rather than believe arguments presented to confuse and conceal the real situation, and undermine our educational professionals.

If by June 10th, we fail to agree on an adequate budget and leaders choose to underfund the schools, our youngest residents will suffer the most, on a daily basis, for years to come. Currently, the Town Manager’s proposed budget is shortsighted, further locking WPS into the downward trajectory of worsening educational outcomes, behavioral problems, and continued teacher and administrator turnover. Be assured, the costs of not funding the FY15 budget far exceed the resources requested by WPS.

 

Dr. Candace Miller Senior Researcher, Mathematica Policy Research Westminster Avenue