Newton's reputation runs into tough fiscal reality

Salter, a professor emeritus at Harvard Business School, led the process for the group, which spent several months preparing in-depth reports about how Newton measures up to other communities, articulating choices facing the city, and identifying ways it can bridge the growing gap between its revenue and expenses.

In many respects, the city's problems are similar to communities all over Massachusetts, but the news is jarring in Newton, where residents accept paying an average tax bill of $8,043 in exchange for living in a city with a reputation for top-notch services and schools.

The five reports - 464 pages so far, and still unfinished - arrive as Newton readies for city elections that will bring in a new mayor to replace David B. Cohen, who is leaving office after three terms. The city has been in the headlines because the $195 million high school it is building is the most expensive school ever constructed in the state.

The citizens' group says the city would have to spend millions more to take care of its other poorly maintained school buildings and roads, while continuing to meet the high expectations of its residents. But, members of the group say, the city's economic model is not sustainable, and therefore residents face a choice: raise enough money to meet expectations or learn to live without some services.

When group member and Canton schools Superintendent John D'Auria said in a meeting that Newton schools are on a "downward slope," some School Committee members were surprised and objected.

"I don't accept that we're on a downward trajectory," said School Committee member Dori Zaleznik in a phone interview. "Most communities in Massachusetts would still give their eye teeth to be Newton."

The citizens' group found that when compared with other cities with similar demographics, Newton pays its teachers higher salaries and serves more children in special education and the Metco program, which buses urban students to suburban school districts. All of these are points of pride in Newton, and underscore the group's point that Newton residents have high - and costly - expectations for their city.

But the Citizen Advisory Group says Newton cannot sustain its level of services unless it makes changes.

The school system, for instance, is facing a growing financial gap. To maintain services, the district needs to increase revenue by 5.9 percent a year. The city's revenue has been growing at about 3.9 percent over the last five years. About 84 percent of the school budget is costs related to people - salaries and benefits.

For long-term financial sustainability, the citizens' group says, Newton needs to look at changing the educational model. One possibility it mentioned was relying more on technology, and less on personal interaction between teachers and students, where appropriate. Another is to hire a chief financial officer to develop a vision.

In the short term, the School Committee can find savings by measures such as outsourcing its school lunch program, controlling utility costs, reducing use of school buses, and increasing bus fees - moves that might not be popular with the parents who elect them.

"We recommend you make them," said Ruthanne Fuller, vice chairwoman of the group, to the School Committee. "But I'm not elected."

"And may never be," responded one School Committee member to laughter.

Therein lies the problem - a sound business decision might not be a good political one.

"The political process directs decisions toward the short term and toward needs that are obvious," said Fuller, a Harvard Business School graduate and strategic planner for nonprofits. "They need to think of the long term. And that may not get them elected again."

And raising property taxes may not be an option in the near future given the state of the economy. Last May's $12 million override request failed.

"Are these things going to be fixed on the backs of homeowners alone? I don't think so. . . . We all need to take a step back and look a little broader," said group member Laura Thompson to the Board of Aldermen last week.

In its revenue report released in November, the group said Newton's choices are "more profound than simply increasing revenues or reducing costs. Rather we must consider reductions in the historic scope and scale of municipal and educational services."

"If voters' recent rejection of the property tax override ballot question suggests limited support for increasing revenues through tax increases, then Newton's residents and their elected leaders must make these difficult choices," the report said.

At a meeting last week, Newton's elected leaders said they intend to study the findings further, then take action.

But some officials were quick to point out that they were forced to make choices because of state mandates.

When Salter said Newton has historically underfunded maintenance of the city's roads and buildings to the point that they are in disrepair, an aldermen said it was a result of Proposition 2 1/2, which caps the additional property tax revenue a community can raise yearly at 2.5 percent.

Salter and Fuller were clear that their directive was not a full-scale evaluation of the city's services and educational system, and their reports stopped short of making any sweeping statements.

But Fuller said they did see "signs of erosion" in the school system, supporting the belief of some residents that Newton is riding on perception.

"We've been living on our reputation," Jeff Seideman, a local tax advocate and Board of Aldermen candidate, said in a telephone interview. "There's been a constant chipping away at the services and infrastructure for quite a few years."

Seideman said the contracts Newton negotiates with its unions, the teachers' union in particular, will have a measurable impact on the city's future because employee salaries make up the bulk of Newton's expenses.

Fuller said residents will have an opportunity to that end with the mayoral and municipal elections this fall - to choose leaders with a vision geared toward long-term financial sustainability.

Also, the group says the city needs to involve employees in simplifying operations on the municipal side, and finding innovative solutions on the schools side.

"We're at a turning point here," Fuller said. "We have to be very creative and thoughtful about how we go forward, or we're going to leave a legacy to future Newton residents of a weaker city."

Rachana Rathi can be reached at rrathi@globe.com