My 2026 Issues
At Norman's Restaurant
When we told people in 1976 that we were moving to East Greenwich, we heard from a number of people that the town had a reputation for being well run. Having lived here through six town managers and ten finance directors, I would say that it is mostly deserved.
That said, I believe we can and should be managing our finances better. I'm speaking here not as a member of the school committee but as a resident who has been paying property taxes in this town for 48 years.
While we have a fairly rigorous budget process that generally works, a careful examination of recent financial data reveals that millions of tax dollars are being spent outside of that process, with minimal oversight and virtually no community input on spending priorities.
- In the six years from 2021-2026 the town manager recommended nearly $3 million in cuts to the school department's requests for funding.
- The town council approved most of those proposed cuts, $2.5 milliion.
- In those six years, the finance director announced $8.8 million in unplanned, unbudgeted surpluses.
- All of the surplus funds were allocated to the town. Nothing was given to the school department.
- The town manager is on record stating that the schools are adequately funded, but in the most recent budget cycle, the superintendent indentified unmet critical needs requiring more than $1 million in additional funds.
I believe that in this situation neither the taxpayers nor the schools are well served.
Documentation of the Surpluses
| Fiscal year | Town Manager's Recommended Cut to School Department Request |
Town Council Approved Cut to School Department Request |
Memo Announcing the Surplus |
Projected Surplus (Unplanned and Unbudgeted) |
|---|---|---|---|---|
| 2026 | $0 | $0 | June 16, 2026 | $1,300,000 |
| 2025 | $500,000 | $500,000 | June 13, 2025 | $1,700,000 |
| 2024 | $579,001 | $579,001 | June 4, 2024 | $1,900,000 |
| 2023 | $500,000 | $500,000 | June 13, 2023 | $1,300,000 |
| 2022 | $600,000 | $600,000 | June 1, 2022 | $1,300,000 |
| 2021 | $802,000 | $370,000 | June 21, 2021 | $1,300,000 |
| Total | $2,981,001 | $2,549,001 | $8,800,000 |
Summary of Unplanned, Unbudgeted Year End Transfers
Note: By law, the town can always transfer additional funds not subject to the 4% cap to the schools to cover one-time expenses.
| Fund | Total | FY2026 | FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | FY2020 |
|---|---|---|---|---|---|---|---|---|
| Municipal Planning Reserve Fund | $205,000 | $30,000 | $30,000 | $25,000 | $30,000 | $25,000 | $25,000 | $40,000 |
| Property Revaluation Fund | $107,000 | $50,000 | $57,000 | |||||
| Technology Improvement Fund | $150,000 | $50,000 | $57,000 | |||||
| Public Safety Comm. Program Fund | $55,000 | $55,000 | ||||||
| Public Works Improvement Fund | $600,000 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | |
| Parks Improvement/Cap Equip Repl Fund | $565,000 | $100,000 | $390,000 | $75,000 | ||||
| Swift Gymnasium Improv Fund | $15,000 | $15,000 | ||||||
| Fire Department Building Imp Fund | $45,000 | $45,000 | ||||||
| Police Cap Equip Repl. Fund | $375,000 | $75,000 | $100,000 | $50,000 | $25,000 | $75,000 | $50,000 | |
| Town Hall Improvement Fund | $1,147,252 | $65,000 | $407,252 | $200,000 | $150,000 | $50,000 | $175,000 | $100,000 |
| Police Dept Building Fund | $220,000 | $170,000 | $50,000 | |||||
| Fire Dept Cap Equip Repl. Fund | $295,000 | $75,000 | $150,000 | $70,000 | ||||
| Recreation Dept Cap Equip Repl Fund | $400,000 | $100,000 | $200,000 | $100,000 | ||||
| Information Tech Cap Equip Repl Fund | $130,000 | $130,000 | ||||||
| Public Works Cap Equip Repl. Fund | $200,000 | $50,000 | $50,000 | $100,000 | ||||
| E G Cemetery Special Revenue Fund | $25,000 | $25,000 | ||||||
| Debt Service Fund | $450,000 | $300,000 | $150,000 | |||||
| 350th Celebration | $20,000 | $20,000 | ||||||
| Compensated Absences Fund | $50,000 | $50,000 | ||||||
| School Department | $0 | |||||||
| Total | $5,054,252 | $615,000 | $857,252 | $1,030,000 | $730,000 | $590,000 | $695,000 | $537,000 |
What is the Reason for the Surpluses?
On page 178, the International City/County Management Association (ICMA) publication "A Budgeting Guide for Local Government"1 states the following:
Without exception, accurately forecasting the current year's revenues is the most important task in budget preparation.
From the annual audit data, we can compute the budget and actual numbers for municipal revenue other than current year taxes:
| Fiscal Year | Revenue Other Than Current Year Taxes (Budget) |
Revenue Other Than Current Year Taxes (Actual) |
Difference | Percentage Difference Budget to Actual |
|---|---|---|---|---|
| 2025 | $7,977,851 | $8,789,160 | $811,309 | -9.2% |
| 2024 | $7,322,932 | $8,735,022 | $1,412,090 | -16.2% |
| 2023 | $6,876,870 | $8,139,242 | $1,262,372 | -15.5% |
| 2022 | $4,880,762 | $6,288,572 | $1,407,810 | -22.4% |
| 2021 | $5,371,092 | $6,406,672 | $1,035,580 | -16.2% |
Because the required property tax levy is computed as the difference betwen this revenue and projected expenditures, every dollar that you underestimate revenue by increases the tax levy by one dollar.
If you expect $6 million in revenue and budget $5 million to be "conservative", you end up collecting $1 million more in property taxes than you would if you budgeted the expected revenue.
When it becomes apparent that revenue will exceed projections by $1 million, passing the surplus off as free money does not change the fact that you collected $1 million more in property taxes than you would have if you had accurately forecast revenue.
But Isn't Conservative Budgeting of Revenue a Best Practice?
On page 180, the International City/County Management Association (ICMA) publication "A Budgeting Guide for Local Government"1 states the following:
The chief executive plays a key role in bringing integrity to revenue forecasts and discouraging the manipulation of revenue forecasts, which can become counterproductive. In the long term, the manager’s most prudent course is to insist on accuracy in all revenue forecasts and to stand firm against their manipulation, whether it is done to protect the budget office or to promote the council’s agenda. In revenue forecasting, your sins find you out, and they do have a cost.
The standard measure of the accuracy of a forecast is obtained by taking the differences between the forecast and actual values and finding the average of their squared values.
The mean square error is usually thought of as the sum of two components:
- A fixed constant component called the bias. The bias term shifts the expected prediction up and down but contributes nothing to the variability of the prediction.
- A random noise component assumed to average out to zero over time. Usually characterized by stating its estimated standard deviation. The noise component does not shift the expected prediction up or down, but it does determine the variability of the prediction.
For an individual forecast year, we only see the sum of the bias and noise terms, there is no deterministic formula for separating them.
However, the expected value of the forecast error is the same as the bias, so the average forecast error can be used to estimate the bias.
If you have more than one forecast-actual pair, you can estimate the noise standard deviation using the fact that the MSE is the sum of the background noise variance and the square of the bias. Use the average forecast error as the bias value in the formula.
Using the annual municipal audit data, we can compute an estimate of the bias for each of the ten finance directors we have had. We have multiple forecasts for nine of them, and for these we can estimate the background noise standard deviation as well.
| Finance Director | Beginning Fiscal Year |
Ending Fiscal Year |
Revenue Forecast Bias |
Revenue Forecast Background Noise Standard Deviation |
Lower 95% CI for Average Revenue Forecast Error |
Upper 95% CI for Average Revenue Forecast Error |
|---|---|---|---|---|---|---|
| Sunderland | 2019 | Present | $1,166,541 | $213,330 | $1,008,504 | $1,324,579 |
| Dykeman | 2017 | 2018 | $2,034,623 | $1,342,287 | $174,308 | $3,894,938 |
| Benoit | 2014 | 2016 | $620,103 | $289,244 | $292,793 | $947,413 |
| Raposa | 2008 | 2015 | $407,543 | $636,094 | -$101,438 | $916,524 |
| Mattos | 1999 | 2007 | $351,738 | $191,954 | $209,536 | $493,939 |
| Wheelock | 1995 | 1998 | $292,045 | $25,957 | $262,671 | $321,418 |
| Faucher | 1993 | 1994 | $97,945 | $58,483 | $16,892 | $178,997 |
| Papineau | 1992 | 1989 | $339,559 | $12,443 | $325,479 | $353,639 |
| Evans | 1987 | 1988 | $279,489 | $142,869 | $81,483 | $477,495 |
| Bartlett | 1986 | $322,034 |
Footnotes
1 Bland, Robert L., and Overton, Michael R., "A Budgeting Guide for Local Government (Fourth Edition)", International City/County Management Association, 2019.