Prop 2.5 Override Vote April 2

“Proposition 2 ½” - Levies, Limits, Ceilings● Question 2 of 1980, “Proposition 2 ½” passed with a 56% to 40% split on the

statewide ballot● Went into effect in 1982 - locking in tax rates● Limits local property tax increases to:

previous year’s total tax $ collection + 2.5% + New Growth

○ New growth is primarily calculated based upon new or redeveloped properties that come on the tax roll and it is calculated as a dollar amount separate and on top of standard allowance for 2.5% increase

● In addition, Prop 2 ½ also limits the total municipal levy of taxes to 2.5% of all valuation of the city or town (Levy Ceiling)

“Proposition 2 ½” - tools and effects over time● In 1982, the law allowed for increases to be made outside of the limitations in

a two ways, by adding a dollar amount to the tax rolls through a vote (override), by adding a dollar amount to the tax rolls through a vote to pay for a specific capital expense (debt exclusion override)

● Many municipalities were actually forced to cut taxes in 1982, to keep taxes below 2.5% limit as required

● Many others struggled to limit expenses as the economy soured in the late 1980’s and hundreds attempted override votes to increase revenues with few successful overrides

How does this affect Melrose - a little history● Melrose has attempted 4 overrides, 1990, 1992, 2003, and 2015, approving

only 1 operating budget override in 1992 ● With an influx of significant state aid in 1993, particularly for education,

combined with override, Melrose had good financials for many years● Since FY2012, the Melrose city budget has grown at roughly 3% per year

○ (this is only possible because of increased revenue through New Growth and permits and fees associated with building construction)

Melrose cost controls already in place● Significant concentration on New Growth revenue and associated permitting

fees - various Oak Grove developments, Station Crossing Condos, The Residences at Melrose Station - lack of open space and properties limits future growth

● Took advantage of state health insurance program (GIC) to save on health premiums saving over $1.4 million in year 1 alone (fiscal 2010);

● Wage freeze in 2011 for all employees● City’s bond rating continues to improve, from A+ in 2004 to AA+ in 2018,

which is the 2nd highest possible rating. Standard & Poors Global Ratings states that “Melrose (has a) very strong economy, supported by a strong management environment w/ good fiscal management policies and practices”

Melrose - Where we are today● Cut 4 teacher positions at Middle School, multiple city

hall positions, DPW positions this year (FY2019)● Unfulfilled supply needs at all schools this year● Nearly $1.2M cut from school budget proposal FY2019● Fire engines and police vehicles in serious need of

replacement (could only purchase 3 of 5 needed police)● 3 years behind in sidewalk repairs funding● Down to $6 per student in art spending● Overcrowded classrooms at many levels, 30+ students

in some classrooms, K classrooms with 23-24 students for a single teacher

How ironic—a city that is so proud of its 100-year-old volunteer symphony orchestra and has such a vibrant arts community, is, at the same time, about to see cuts that will threaten our schools’ music and art programs. - Mayor Infurna, 1/15/19

Melrose - A revenue problem Total Revenues

2012 2013 2014 2015 2016 2017 2018 2019

Property Taxes Total $46,488,699 $48,013,340 $49,739,231 $51,504,781 $53,374,969 $55,285,526 $57,236,181 $59,375,238

State Aid Total $12,493,103 $13,169,713 $13,308,025 $13,636,197 $13,790,601 $14,334,673 $14,576,405 $14,906,670

Local Receipts Total $6,899,703 $7,114,950 $8,156,801 $8,082,616 $9,030,807 $8,633,604 $9,079,947 $6,657,461

Other Available Funds - School $2,685,102 $3,004,121 $3,935,123

Other Available Funds - City $2,086,270 $2,023,383 $2,632,903 $3,087,505 $3,058,540 $2,837,395 $2,777,287 $2,750,740

REVENUES TOTAL $67,967,775 $70,321,386 $73,836,960 $76,311,099 $79,254,917 $83,776,300 $86,673,941 $87,625,231

Melrose Public Schools began sweeping reserve accounts to pay for basic school services.

Melrose - A revenue problem Revenue Increases

2012 2013 2014 2015 2016 2017 2018 2019

Property Taxes Total $1,524,641 $1,725,891 $1,765,550 $1,870,188 $1,910,557 $1,950,655 $2,139,057

State Aid Total $676,610 $138,312 $328,172 $154,404 $544,072 $241,732 $330,265

Local Receipts Total $215,247 $1,041,851 -$74,185 $948,191 -$397,203 $446,343 -$2,422,486Other Available Funds - School $0 $0 $0 $0 $2,685,102 $319,019 $931,002

Other Available Funds - City -$62,887 $609,520 $454,602 -$28,965 -$221,145 -$60,108 -$26,547

REVENUES TOTAL $2,353,611 $3,515,574 $2,474,139 $2,943,818 $4,521,383 $2,897,641 $951,290

Melrose - A revenue problem Revenue Percents of Budget

2012 2013 2014 2015 2016 2017 2018 2019

Property Taxes Total 68.40% 68.28% 67.36% 67.49% 67.35% 65.99% 66.04% 67.76%

State Aid Total 18.38% 18.73% 18.02% 17.87% 17.40% 17.11% 16.82% 17.01%

Local Receipts Total 10.15% 10.12% 11.05% 10.59% 11.39% 10.31% 10.48% 7.60%

Other Available Funds - School 0.00% 0.00% 0.00% 0.00% 0.00% 3.21% 3.47% 4.49%

Other Available Funds - City 3.07% 2.88% 3.57% 4.05% 3.86% 3.39% 3.20% 3.14%

REVENUES TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Revenues - A closer look...

2019

Property Taxes Total $59,375,238

State Aid Total $14,906,670

Local Receipts Total $6,657,461

Other Available Funds - School $3,935,123Other Available Funds - City $2,750,740

REVENUES TOTAL $87,625,231

This includes Chapter 70 Education Aid ($8.4M), General Government Aid ($5.2M), Charter School Reimbursement($362K), and Veterans Benefits ($87K)

BUT - The state also reduces Education Aid and General Aid because of a few major state obligations - largest are:

Charter Tuition: $2.9MMBTA Fee: $617K

After subtractions, full revenues look like this:

2019

Prop. Tax $59.375M

Ed. Aid $5.5M

General Aid $4.58M

Local $6.65M

Other School $3.9M

Other city $2.75M

$82.75M

Melrose - tax bill comparison Municipality Year Average Single

Family ValueSingle Family Tax Bill*

Saugus 2019 426,142 5,190

Burlington 2019 502,545 5,267

Melrose 2019 580,265 6,273

Wakefield 2019 528,224 6,777

Reading 2017 533,537 7,486

Winchester 2019 1,080,308 13,083

Melrose ranks in the middle of its neighbors - but how do Saugus and Burlington spend millions more on services?

Answer: New Growth of commercial properties2014-2019 Burlington - $16.9M (~80% comm)2014-2019 Saugus - $5M (~80% comm)2014-2019 Melrose - $3.9M (~70% residential)

Rule - Strong commercial tax base keeps residential taxes low.

*Reading 2019 not available

Melrose - School finance● State law mandates a certain level of school spending each year - Required

Net School Spending - increases annually by formula● With limited revenue, Melrose has been forced to keep budgets tight and still

find ways to meet state minimums● Facilities maintenance was incorporated into DPW budget, including janitorial

staff as cost limiting measure● Nurses are provided by Board of Health - ***Melrose is still 2 school nurses

below state requirement because of lack of funding for positions● State funding has not kept pace with state mandates in spending leaving

significant gap that needs to be filled with local resources

Melrose - nothing fancy!

Melrose hasn’t exceeded 5% above required spending for a decade.

Fact - This level of spending has left Melrose at 12th from the bottom in per pupil spending for the whole state!

Current fiscal year funding at 102.55%!

Doesn’t Melrose just spend what everyone does? - not even close

Melrose - State Aid vs Mandated school spending

Note: Chart does not include subtraction from state aid for charges the city pays for state assessments and charter schools. Source: MassDOR, Mass DESE.

First aid increase in 3 years, not keeping pace with mandates

Gap of $1.074M!

Melrose - What we could lose

● Schools are mandated by state law to receive a required level of spending, so any amount of new revenue must first go toward meeting that requirement leaving all other departments with remaining available

● School budget has relied on ~$750K in “Free Cash” each fall that is transferred from previous fiscal year since 2009 - not a stable source

● Whole departments? Weekly trash pick-up? Library losing all city subsidy?

“There isn’t a tremendous amount of wiggle room,” said Alderman-at-Large Monica Medeiros. “In most of the city departments, I feel comfortable with it.” June 24, 2016 Melrose Wicked Local

● The City doesn’t have many choices left - many departments are already regionalized or only have one staff member

Melrose - What we could lose● Two school budgets presented - one with override and one with only 2%

increase in funding

City of Melrose funding: $27,596,824Medicaid/other funding: $800,000Melrose PS offset: $4,193,418FY19 Total: $32,590,242

Budget A

City of Melrose funding: $32,338,667

Medicaid/other funding: 0

MPS offset: $3,181,435

FY20 total: $35,520,102

Budget B

City of Melrose funding: $28,148,760

Medicaid/other funding: $800,000

MPS offset: $3,183,418

FY 20 total: $32,132,178

+2% increase in

City funding

Override passesFY2019 budget

Where the override goes:Override to schools budget $4,741,843.50Override to city for health and other benefits $438,156.50

$5,180,000.00

+$4.741M

Melrose school budget presented - No Override

Positions AT RISK & costPositions AT RISK & cost (at Middle School)

Positions AT RISK & cost (High School)

Withdraw the request for 7 additional staff to address enrollment $420,000 Grade 6 teacher $50,046

Reduce High school secretaries to 10 months $14,500

Elementary teacher $47,772 Grade 7 teacher $49,877Eliminate courses with < 20 students (2 pos) $110,000

Reduce grade 3 instrumental $30,000 Italian teacher (.2) $16,208 Consider cutting one foreign language $55,799Eliminate 9 K paraprofessionals $174,105 German teacher (.2) $14,211 Eliminate the permanent substitutes $108,0002 Instructional coaches $158,290 Middle School team leaders $10,800 Cut Freshman Sports $42,343Elem. lead teacher positions $12,500 Technology support @ MVMMS $46,559 Cut 3 JV Coaches $11,2981.5 Asst. Principals $133,320 At Secondary Campus Reduce Drama/Musicals $7,212Academic Interventionists (5) $125,000 Academic Facilitator $68,234 Eliminate Youth Band $4,018

Content Facilitators $66,260 Athletic Transportation $30,000Hall Monitors (2) $35,595 Reduce curriculum materials 20% $13,566

Reduce tech and software 20% $55,335

Totals: $1,100,987 $357,790 $452,071$1,910,848

Melrose school budget - Yes Override28.5 Staff Positions

Restores:

4 Restore Middle School Staff

2 Department Chairs

Adds:

4 Elementary Teachers

2 Elementary Specialist (Art, Music)

1 Elementary Asst. Principal

2 Elementary Social Workers

Override funding - $1,905,000 for staff hiring

Classroom and Infrastructure Needs $675,000 - books, district technology and Beebe school rent

4 High School Staff

1.5 ESL Teacher

7 Paraprofessionals

1 High School Guidance Counselor

Investement in high quality teacher recruiting and retention - $1,850,000

School budget stabilization -$750,000

Melrose - City services budget at risk● Projected gap of at least $610K● Total Prop 2 ½ increase and new growth: $1.8M● State aid will only increase a net $76K under Governor’s budget● Schools will only be granted $551K (2%) increase allocated from revenue growth● Entire remainder of city departments will have to divide up $1.25M in new dollars● Local receipts have not been reliable and have actually dropped significantly recently

No override - FY2019 City Departments:$51.5M - including pension, health, capital budgets

+ $1.25M (=~2.4% increase) (FY2020)

= $52.75M

Override passes - City services will use $551K of school grant - FY2019 City Departments:$51.5M - including pension, health, capital budgets

+ $1.8M (=~3.5% increase) (FY2020)

= $53.3M + additional $750K in October Free Cash

Melrose - City services budget at riskReleased on 2/13 - proposed gap filling measures if override fails

● Department of Public Works Total: - $303,500○ Eliminate 3 positions, cut yard hours, cut

street sweeping, cut school outreach program, eliminate Main Street beautification

○ Cut road/sidewalk repairs, mowing● City Hall Departments Total: -$164,978

○ Eliminate 1 position, eliminate commission budgets, cancel online permitting

○ Suspend Mayor community events, Kindergarten Night, Memorial Day Parade

● Council on Aging Total: -$48,214○ Limit Milano hours to 8-1○ Cut transpo by 70%○ Reduce staff to 2 hours/wk

● Melrose Public Library Total: -$163,310○ Will likely lose accreditation with cuts○ Eliminate 11 highschool age pages○ Close on Sunday year round○ Cut program budget by 70%

● Melrose Police Department Total: -$138,000○ Reassign 3 special duty positions,

eliminate 1 patrol officer● Memorial Hall Total: -$62,954

○ Eliminate all fee waivers and discounts for nonprofits

○ Eliminate Mon-Thurs rentals○ Cut cleaning and maintenance by 50%○ Suspend all repairs

Non-School Total: -$880,956

A community process...The Mayor’s process - OneMelrose supports the Mayor’s process of inclusion and discussion from all members of the community that informed the override

● Two community listening sessions attended by hundreds of residents● Additional listening session to outreach to older residents ● Community questionnaire with more than 1000 responses● Dozens and dozens of meetings with individual residents or groups● Question and answer sessions hosted by the mayor and city staff

One Melrose - One future

Shall the City of Melrose be allowed to assess an additional $5,180,000 in real estate and personal property taxes for the purposes of the general operation of the Melrose Public Schools for Additional Classroom Teachers and Staff ($1,905,000); Classroom and Infrastructure Needs

($675,000); Supplementing the Operating Budget of the Public Schools ($750,000); and for Classroom Teacher and Other District Staff Compensation ($1,850,000), for which the monies

from this assessment will be used for the fiscal year beginning July 1, 2019?

On April 2, you will be asked this question on the ballot:

Vote YES, April 2, 2019!!

Sources:● Massachusetts Department of Revenue: Division of Local Services● https://www.mass.gov/lists/reports-relating-to-property-tax-data-and-statistics● https://www.mass.gov/lists/cherry-sheet-estimates● Melrose Visual Budget● http://www.melrose.visgov.com/● Melrose School Budget Presentation FY20● https://www.melroseschools.com/sites/melrosemaps/files/uploads/january_29_2019_budget_presen

tation_0.pdf ● Massachusetts Department of Elementary and Secondary Education● http://profiles.doe.mass.edu/profiles/finance.aspx?orgcode=01780000&orgtypecode=5& ● Mayor Infurna’s Blog● https://mayorinfurna.wordpress.com/

Additional sources:https://melrose.wickedlocal.com/news/20160624/aldermen-approve-75m-city-budget