Budget Season

It’s budget season.  This is the first year in a while that I’m not working on some sort of town budget either as a reviewer (Finance Committee) or as a consultant to creating a budget (Library Trustee).  But, I’m hearing people talk about debts and overrides, so I thought I would share my take on the budget process.

At the library, we worked from the ground up to build a budget.  The most important (and usually largest) portion was the salaries.  In municipalities, everyone is in a "step,” which represent annual increases based on years of experience and a "lane,” which represent different pay levels based on education and job requirements.  So, it’s a simple formula to calculate the funds needed for salaries.  We created a spreadsheet with all the employees (names redacted), their step/lane and any longevity bonus (if applicable).  This gave us an accurate snapshot.

The library employees (except for the director) are not in a union.  This is unusual for Sudbury, where most employees are part of a union. As a result, their COLA (cost of living increase) every year is determined by town management (not dictated by a contract like other departments).  Our spreadsheet had a variable for COLA so that we could see the effects of different increases.

Of course, over a year there can be turnover in staff, leading to some increase or decrease in the funding required.  A small allocation is estimated for this change.  

Once the staffing funding is estimated, other expenses are estimated.  Recently, the library has been conservative on its asks, so the budget has been basically enough to meet the minimum requirements for maintaining status as a state library (M.G.L. c. 78, s. 19A) which basically means the increase should be 2.5 percent.

In my opinion, this process should extend to the whole town budgeting process.  In particular, there should be a clear snapshot of what the total staffing funding is based on all step/lane information.  Furthermore, for union employees, the COLAs are also dictated by contract, so the total funding should be very clear.  

After seeing $9 Million in free cash (over budgeting) last year, we need to understand where that overburdening is happening.  If I were on the select board, I would be asking to see the spreadsheet of the salary liabilities as dictated by union contracts - and I’d be comparing them to the budgeted salaries. Salaries and benefits make up some 85% of the budget, so it would be good to know how much of the $9 Million in free cash was due to over budgeting in the salary line items.