Stacking up

Study compares municipal spending in Cape, Scarborough, South Portland and five other communities.

REGION — Who hasn't sat though a town budget meeting without hearing about how much better things are done in the next town over –and for a lot less money, too?

Now, eight municipalities are taking control of those inevitable comparisons. Led by Falmouth, the towns of Cape Elizabeth, Scarborough, Cumberland, Freeport, Windham and Yarmouth, along with the city of South Portland, have put all their budgeting chips on the table, to see how they stack up.

"I don't think this is a report card on any one community," said Scarborough Town Manager Tom Hall. "But it is a very useful exercise. I think it's meant as food for thought. It gives us a chance to ask why are we different in this regard, or that one, although it doesn't necessarily mean that there’s anything wrong."

The latest comparisons spin out of benchmarking studies done by Cape Elizabeth for the past six years. At the behest of his Town Council, Town Manager Michael McGovern began to assemble spreadsheets comparing his town to 10 others in different budgeting areas.

"It was information the council wanted to see," said McGovern. "I don't think those comparisons had any kind of radical affect on what they did with the budget, but I would say that it definitely informed their budgeting decisions."

However, when those charts were shared with the towns used by McGovern as a yardstick, many could not help but question the comparisons, especially the ones whose spending seemed to fall in outlying positions, either far above, or below the median.

"My town manager loved the concept of looking across the region and seeing how we compare to our peers," said Randy Davis, Falmouth budget and purchasing director. "But there was a concern about whether we were truly looking at apples to apples, in every budget category.”

So, Davis "got volunteered," he said, to pick out those differences.

All municipalities adhere to the same basic GASB (Government Accounting Standards Board) rules, he said, but there's nothing in those standards to dictate how towns divvy up line items within several broad budget categories. For example, Davis said, some towns account for the code enforcement officer in administrative services, while others place his or her pay in the public safety budget. Some towns divide employee benefits by department, while others include all health insurance costs as an administrative function. Meanwhile, no two municipalities seem to include the exact same mix of services within public works.

How budgets are presented to the public is often due to the quirk of some long-ago manager, perpetuated by habit and tradition. Modern managers are loathe to change things, said McGovern, even when the changes make sense or align with the way budgets are drawn up in most other towns, because “people like what they’re used to.”

“People like to make comparisons form year-to-year,” he said, “and they can get ornery if you change anything that then makes it hard to do that.”

So, it became Davis' job to tease out the differences, and it was a task McGovern was more than happy to pass off. After all – and this is another difficulty in comparing municipal spending – even though Falmouth is close to Cape Elizabeth in size (11,185 people, versus 9,015) it has a three-person finance department, whereas, in his town, McGovern is the finance department.

Still, Davis tried to make columns line up as neatly and equally as possible, spending more than 40 hours on the project, not counting two half-day meetings with financial directors from all eight municipalities, one in January, the other in June.

"We had to get together to decide how we wanted to report things out," said Davis, noting that school spending, in particular, presented a challenge, because some towns run their own school departments (and have a gross expense), while others belong to regional school units (and report a net expense).

“The premise of this is to enable a comparative analysis, for the town managers to look at and see where they are in relation to their neighbors in terms of costs per capita,” said Davis. “Basically, it’s a tool to open a line of communication between town managers, should they want to drill down further into the numbers, to explain seeming differences,” he said.

“The challenge will be putting this data in the proper perspective,” said Hall. “There’s a fair amount of complication still in each of these metrics. However, it’s important to know that each of these eight communities appreciate that times are such that we need to be really analyzing what we do, and how we do it, with an eye to identifying either efficiencies or deficiencies.”

Although the results are still in draft form, the numbers are illuminating.

For example, one chart in the report, which Hall said “jumps right off the page,” is debt service. Scarborough leads the pack far and away in that field, owing $6.74 million in bond payments ($356.05 per person), while the next closest community is either South Portland, which owes $1.21 million in total dollars ($48.52 per resident), or Yarmouth, which owes $145.07 per capita ($1.21 million total).

Of course, the numbers only reflect borrowing through the end of the last fiscal year for which audits have been completed, ending June 30, 2010.

That means South Portland’s numbers don’t reflect the recent high school bond, and Hall said that, in many ways, Scarborough was simply ahead of the curve in borrowing for school construction. However, it will ask voters to pile on more debt in November, when the new $37.7 million Wentworth School goes on the ballot.

Hall said public debt has become a big enough issue in Scarborough recently that the Town Council’s finance committee has already put it on the front burner. The new benchmarking study, he said, is likely to further galvanize that conversation.

Hall pointed out that while the debt chart is a “red flag,” it does not, by itself, paint the entire picture of Scarborough’s situation. However, while the study cannot provide direct answers, it does prompt questions, such as: Are other towns borrowing less because they are deferring maintenance? Or, are they borrowing less because they are making bond payments out of direct taxation, without financing methods such as impact fees?

“I think it comes does to a philosophical decision on a town’s comfort level with incurring debt,” Hall said. “I don’t know that we’ve ever had a philosophical discussion in Scarborough about incurring debt beyond.  ‘Yeah, I like that project, let’s do it.’

“This study is going to be the start of a conversation that each community is probably going to have to have with itself,” said Hall, “and I predict the debt piece is the one that will generate the most conversation locally.”

But there are other areas in which Scarborough is the outlier. It spends the most on public works – which Davis said he boiled down to “just the roads”­– at $4.17 million annually, almost twice second-place South Portland, which spends $2.37 million per year. However, in terms of per capita dollars, South Portland drops to last on the list, at $94.78 per person each year, while Scarborough stays on top at $220.40.

Part of the reason for the higher costs in Scarborough could be that it has the most lane miles to care for – 346 compared to South Portland’s 286.

By comparison, Cape Elizabeth, which has 125 lane miles, spends $1.15 million ($127.86 per person) each year on road maintenance and associated employee compensation

Meanwhile, as a host of school boosters pointed out during the most recent budget season, Scarborough spends the least on public education as a percent of its total budget, 46.6 percent, compared to 54.7 percent in South Portland and 66.9 percent in Cape Elizabeth.

However, the study shows that Scarborough passes South Portland in per capita spending on education ($1,415.03 versus $1,350.89) and bests even Cape Elizabeth in total local spending ($26.77 million versus $17.33 million).

The data, said Hall, will help him direct his study of the numbers in time for next year’s round of budget talks.

“Some numbers from Cape Elizabeth were thrown at us last year,” he said, “and that’s very easy for folks to do. It’s human nature, they will cherry-pick and pluck out the pieces that makes their point. But, right now, if someone cites a statistic, and I don't know the source, it’s hard to respond to it in any coherent fashion without sounding defensive.”

Hall said a closer look at the numbers might, in fact, reveal that Scarborough should spend more on education. But numbers alone do not decide budgets.

“Although we should be aware of what’s gong on around us, it’s not about keeping up with the Joneses,” he said.

While both Hall and McGovern point out that benchmarking is only the start of a process in examining municipal spending, each saying the current study is unlikely drive either town out of long-held habits in a single budget cycle, McGovern does give an example of how the data can be used.

“In our previous benchmarking, we noticed that we were significantly higher than surrounding communities in what we spent on solid waste and refuse disposal,” he said. “That caused us to step up our recycling and we’ve increased that tremendously in the last year or two.

According to the benchmark study, South Portland spends the most on solid waste ($2.27 million per year) although it ranks fourth per capita ($90.92 per person). Scarborough is second in total dollars ($1.85 million) and third per capita ($97.60), while Cape Elizabeth is fifth in both total dollars ($781,965) and per capita spending ($86.74).

McGovern also pointed out that benchmarking is not all about how much, or how little, is spent in a budget area. It can also help to decide dramatic policy issues.

For instance, during last year’s budget talks, a movement arose to save money for use in other escalating cost centers by disbanding Cape Elizabeth’s volunteer fire department, and contracting with South Portland for that service.

“Nothing against South Portland,” said McGovern, “They have a much different situation with much different needs, but I said, ‘That’s just nuts, it doesn’t make sense.’ If you look at the numbers, Cape Elizabeth spends $61.35 per capita on fire protection, while South Portland spends $215.61. Why would we want to merge our services to that? What purpose would it serve?”

And while calls to disband Cape Elizabeth’s fire department petered out, there are still perennial calls to contract out other services, like assessing. But again, McGovern said, the numbers show Cape Elizabeth spends the least on general government administration, at $1.14 million annually and $126.80 per capita.

Compare that with South Portland ($3.49 million total/$139.61 per capita) and Scarborough ($4.58 million total/$242.25 per capita).

“According to the numbers, there’s no real need for Cape Elizabeth to regionalize services, and no proof there’d be any real benefit if we did,” said McGovern.

Not everyone is willing to put too much stock in the benchmarking study, just yet. Greg L’Heureux, South Portland’s financial director, said there are still “inconsistencies that we are still trying to filter out” in the recently completed draft report.

However, ever so, some numbers jump out, he said.

“I think the one thing that became very obvious is that the larger communities that are more service oriented had significantly higher public safety costs,” he said. “On a per capita basis, it was  kind of surprising that it was as significant as it was.”

As L’Heureux noted, South Porland and Scarborough spend the most on public safety (at $446.45 and $434.95, respectively), far eclipsing third place Freeport, at $307.99.  Once again, Cape Elizabeth brings up the rear, spending just $226.72 per capita.

L’Heureux said he intends to make a presentation to the South Portland City Council once he’s fine-tuned Davis’ benchmarking study, although City Manager James Gailey appears to put little stick in the results.

“I find it interesting, but not earth shattering,” he wrote, in an emailed reply to a request for comment.

“When we do a benchmarking study we typically use Portland, Bangor, Augusta, Sanford, Biddeford, Saco and Westbrook,” wrote Gailey. “We offer a greater number of services and higher level of services than the communities listed [in the recent study].  For instance, South Portland has its own bus service, a golf course, a municipal pool, a full-time fire department, full recreation program with Community Center, large police department and so on.  These other communities don’t have the level of service as South Portland has, which relates to a large budget to support these services. 

“As the demographics show, we are a 25,000 community, but within 14.3 square miles – very small and dense,” wrote Gailey. “The second largest community in this study is 6,000 less in population, but has 49.0 square miles of area.

“In short, the data is intriguing and interesting to look at, but I would rather see South Portland lumped into cities that are 20,000 population and higher who have similar service offerings,” wrote Gailey. “This would give us a better idea how we stack up.”