As we approach Annual Town Meeting, rescheduled due to the COVID-19 pandemic, we know many of you have questions about reductions to the proposed Fiscal Year 2021 (FY21) budget that was prepared and published in the warrant prior to the start of the public health crisis. We hope to answer many of those questions here and explain the reasons behind the reductions.
Why are we reducing the budget?
The COVID-19 crisis has had a profound impact on the economy. Locally, we anticipate substantial losses in state aid, hotel/motel/meals taxes, investment income, licenses and permits, and other revenue sources. Based on state and local projections, we expect to face a $2.2 million budget shortfall in FY21. We are likely to face similar shortfalls in the following two years. Of the $2.2 million, around $600,000 in reductions are proposed for Town departments, and roughly $1.3 million are proposed for the schools. The remaining funds will come from savings in our debt service and snow/ice removal budgets.
- Can we use the Town’s reserves or free cash to cover the losses?
We can, and we are: the $2.2 million represents the shortfall for FY21 that remains after using $6 million from free cash and $1.3 million from the available tax levy. Given the likely duration of this downturn, if we used up all our free cash in FY21, we would have to raise residents’ property taxes nearly 15% in FY22 and beyond to cover the expected shortfalls in those years. We know many people are facing their own economic hardships due to the pandemic, so that’s an option we’d like to avoid.
- Why are the schools responsible for the majority of reductions?
As in most towns, the school department in Bedford makes up the bulk of our budget. Bedford’s schools are consistently ranked highly in the Commonwealth, and many people move to Bedford because of our excellent schools. That excellence takes resources: the schools employ the vast majority of Town employees and use greater resources than any other Town department.
- The proposed budget in the Annual Town Meeting warrant shows the schools make up 43.8% of the total Town budget. Why are they absorbing 67% of the budget reductions?
The proposed budget in the warrant is technically correct: the school department covers around 44% of the overall Town budget. That overall budget, however, includes costs common to both Town and School, such as insurance and benefits, utilities, and debt principal and interest payments that are not included in the annual budget guidelines that the Finance Committee sets for each department. When you remove those costs from our total expenses, the school portion of what remains is just over 67%.
- If schools will have additional expenses to meet COVID-19 protocols, why aren’t we adding to their budget instead?
We do anticipate increased costs to reopening schools, and we are waiting for further guidance from the state’s Department of Elementary and Secondary Education on exactly what those costs will be. We hope those expenses will be offset by the next round of federal CARES Act funding, which will be released in mid-July. Our two boards, as well as the Finance Committee, have committed to reevaluating the budget in November for Special Town Meeting. If additional monies are needed then beyond the federal funding, we will look to utilize reserve funds to cover the expected cost increases for the schools.
- Why are we reducing [X]? Why not [Y] instead?
Each department’s budget has been carefully evaluated for ways to fill the gap. Both Town and school staff have sought to reduce costs without reducing services. Some of the Town-side reductions, for example, would eliminate positions that were proposed in the original FY21 budget but not filled. The school-side reductions include postponing equipment replacements and realigning support services, with minimal staff reductions. Both Town and School, with the cooperation of our outstanding staff, will not, to the extent possible, have salaries increased in FY21. We know many residents are concerned about specific reductions, and we recognize that each reduction impacts someone. None of these decisions is made lightly.
- I’ve read about calls to reduce police department funding. What is the BPD’s budget?
The Bedford Police Department’s proposed FY21 budget is approximately 4% of the total budget, at just over $4 million, of which 97% goes to salaries. The BPD has strong partnerships with our social workers and mental health professionals, as well as Communities for Restorative Justice, to help ensure our officers maintain the trust and support of all members of our community. Any reductions to the BPD would mean a loss of staff—and one of the proposed Town reductions, in fact, is the loss of a part-time staff position at BPD.
- Can we reduce the capital projects budget instead?
Capital projects fall outside the operating budget and are funded differently. Most of our capital projects are bonded, using borrowed funds. We will move to postpone several projects—including the new fire station, the BPD renovations, and the new HVAC system at the library—at Town Meeting, which will result in the debt savings mentioned above. The proposed FY21 capital projects that remain total just under $6 million and most are ongoing maintenance and programmatic replacement projects. Eliminating or postponing these projects could create larger and more expensive headaches in the near future. We don’t want to make short-term decisions that would put us in long-term jeopardy.
- Are these the only reductions we’ll have to make?
We anticipate that the economic recovery period from COVID-19 will last for several years. As the public-health situation evolves over the next several months, and we get more clarity from state and federal partners on expected revenue losses, we may need to readjust our budget projections and make further reductions in the fall and/or for FY22 and FY23. Municipal budgets, especially schools, tend to be lagging economic indicators, with effects felt further into the future than other economic sectors.
The members of the Select Board and School Committee understand that these are difficult decisions. We are your neighbors, and these proposed reductions affect us and our kids, too.
Bedford is fortunate to have a strong school/Town partnership. Our residents have supported major investments in our infrastructure over the years, including recent building projects for all four schools, such as the current renovations at BHS and JGMS. Town leaders, both elected officials and professional staff, are grateful for the trust and confidence Bedford residents have placed in us, and we appreciate your continued support in these uncertain times.
If you still have questions, we encourage you to attend or watch our regular meetings, which are open to the public and recorded by Bedford TV, or to contact us or the Town Manager for more information. We look forward to seeing you at Annual Town Meeting on July 11, at 9:00 am on Sabourin Field at BHS.