Taking a Look at “People Costs”
Weston Town Crier, March 25, 2021
The following was submitted by Frank Caine
Weston’s property taxes are significantly higher than neighboring comparable towns and have been growing faster than inflation. One of the primary drivers has been a rapid increase in employee compensation. The number of people we employ in town government has been relatively flat, in line with Weston’s stable population and number of households. The number of teachers and staff employed by the schools is also flat despite a significant decline in Weston school enrollment.
The employee compensation challenges result from continually increasing salaries and benefits per employee in a very low inflation environment. According to the most recent Report of the Finance Committee, the all-in cost of all of the people who are employed by the Town of Weston – including the employees of the Schools and the employees of the Town Government and Town Services – represented over 80% of the total budget for the current fiscal year. That percentage hasn’t changed significantly over the last ten years, perhaps longer.
Here are some facts related to employment and compensation, as presented in the proposed budget for FY2022, compared to the same data five and ten years ago. It’s worth noting that the FY2022 budgets are still being refined, so the following may change a bit between now and the time the FY2022 Budget is presented to the residents for approval in May.
The way employment is measured for budgeting purposes is by counting so-called Full Time Equivalents, or FTEs. So, for example, one full-time person would be one FTE, and so would two half-time people. The FTE statistic is a way of measuring, in a comparable way from one year to the next, the level of effort that is required to perform a task or provide a service.
Total FTEs have been basically flat over the past 10 years. The FTEs in the School system are down slightly, but they certainly have not come down anywhere near the extent that enrollment has declined 21% over the same period. Total enrollment was reportedly 2,359 students in FY2012 and is expected to be 1,874 students in the upcoming Fiscal Year.
Yet, despite flattish FTEs, total budgeted expenditures have risen 39% over the past ten years, with School expenditures having risen 31% and the cost of Town Government and Town Services having risen 49%. A large portion of those increases is attributable to “People Costs”; that is, the annual cost of salaries, plus benefits.
As you review the compensation figures, keep in mind that “benefits” means current benefits – like healthcare insurance, workers’ compensation insurance, vacation, paid leave, etc. – but does not include funding for Pension plans and retirement health benefits (OPEB). Both of those represent future compensation.
For the Boston area, the Cost of Living (as measured by the regional Consumer Price Index) has risen 18% over the last ten years. Compensation in Weston has risen at a much higher rate over that period. Again, according to the most recent data from the Massachusetts Department of Elementary and Secondary Education (DESE), teachers’ salaries in Weston are approximately 5% higher than the average of six comparable school districts, benefits are 64% higher, and healthcare benefits in particular are 72% higher.
It is a fact that salaries and benefits are, in large part, a function of contractual agreements that cover most municipal employees. However, three issues remain. First, somehow other school districts (with similar if not identical labor agreements) seem to be able to manage their union relationships and, therefore, their People Costs at a lower (average) level than Weston has, without sacrificing the quality of education that their children are receiving, again according to DESE.
Second, our costs per FTE have risen significantly faster than inflation (or the cost of living).
And third, whether Weston Town Government and Town Services are right-sized is hard to know because there has not yet been a review with the Select Board about the sizes of the Town departments relative to those of comparable towns.
In a letter recently submitted to the Town Crier, the point was made that property taxes on the median home in Weston are 17% higher than the median property taxes of those same nine other towns. That represents approximately $14 million of property tax revenue. Since People Costs represent 80% of total spending, they are by far the largest contributor.
It is reasonable for residents to expect the School Committee, the Town administration, and the Select Board to address these cost issues in the current budget cycle. If not, you should expect to see a continuation of higher-than-average property taxes. The longer that persists, the worse it will be for property values.