Merrill Lynch's dealings with Springfield have spawned a probe by the state attorney general. (Mike Segar/Reuters)
"Springfield left its fate to Merrill: Firm called shots in complex, costly investments"
By Beth Healy, Boston Globe Staff, January 28, 2008
SPRINGFIELD - Trouble has a way of finding this long-struggling city. But in November 2006, when Springfield financial officials found themselves with a multimillion-dollar surplus of cash for the first time in years, it seemed as though their troubles were behind them.
Not for long. Just 10 months after placing some $50 million with Merrill Lynch & Co., those same officials would be scrambling to explain how they'd lost nearly $13 million on investments so risky that state law bars cities and towns from owning them - investments linked to the subprime mortgage collapse that has rocked Wall Street and world markets.
"There are no more aggressive sellers in this business than the investment banks," state Treasurer Timothy Cahill said in an interview about the Springfield losses. "Generally they have an advantage when they go into a city or town."
In this case, Merrill Lynch - the firm that bet the most on the subprime market and was about to lose the most - was clearly in the driver's seat. Merrill wasn't a mere broker ped dling investments to Springfield. It was the creator of these complex securities, the seller, and the sole calculator of their value.
And there is evidence that Merrill did not fully disclose the nature of the investments until it was too late.
To be sure, Springfield officials should never have allowed this investment to take place. But their correspondence with Merrill shows that they were confused about what they had agreed to. Merrill's dealings with Springfield have spawned investigations by Secretary of State William F. Galvin and Attorney General Martha Coakley, and inside Merrill Lynch itself.
Christopher Gabrieli, chairman of the control board that oversees Springfield's finances and a former candidate for governor, said, "It's fairly clear that Merrill offered us and sold us something clearly unsuitable for us, and not something we were eligible to buy."
Bill Halldin, a Merrill Lynch spokesman, declined to say whether the investments were appropriate for Springfield, saying only, "We are conducting an extended review of the circumstances of these transactions and expect to respond further to the city shortly."
At Springfield City Hall, the first clue that something had gone terribly wrong came last July, on a monthly statement from Merrill Lynch - and it was subtle. The names of three investments worth $13.9 million in its account had suddenly changed. Now, each one had the acronym "CDO" tagged onto its name.
A large investment that had been called Centre Square Ltd. - at least through June - was now called Centre Square CDO. Two other, smaller investments also had their names changed. CDO is shorthand for collateralized debt obligation, a security based on a portfolio of sliced-up bonds and loans. In this case, the underlying portfolio included mortgage-related securities.
There were reports detailing record home foreclosures and concerns about credit ratings on CDOs. And there were dire warnings of losses to come at Wall Street's investment houses, which had loaded up on these arcane investments and were now repackaging them and selling them to individuals, not just to large, sophisticated investors.
The full pain of the wreckage would not come until later in the year. Merrill Lynch has now rung up losses of $7.8 billion in 2007, written down the value of $24 billion in investments and ousted its chief executive as a result of the debacle. And around the world, losses from subprime mortgages and the securities built around them have hit an estimated $170 billion.
Merrill Lynch said it could not explain why the names of Springfield's investments changed last July. But the timing of the disclosures was more than a little curious.
By August, the market value of Springfield's three CDO investments had fallen 25 percent, on paper. By the end of September, they had plunged 50 percent, according to Merrill Lynch's calculations. And at the end of November, the original investment of $13.9 million was marked down to less than $1.3 million.
Springfield officials were slow to react. Letters between the city and Merrill Lynch's legal department dealing with rudimentary questions about the CDOs were penned in November and December, long after the losses had hit. It wasn't until November that officials would learn the details of Centre Square - a "CDO of CDOs" registered in the Cayman Islands and put together by Merrill and a New York hedge fund firm, Petra Capital Management.
Centre Square was a $462 million portfolio created by Merrill Lynch out of CDOs it owned. Wall Street firms were creating such vehicles in droves, according to analysts and rating firms. For a fee, Petra Capital repackaged the securities into the Centre Square entity, and Merrill Lynch then sold the new securities to its clients.
Merrill Lynch was also the underwriter of the other two CDOs it sold to Springfield. Springfield was not a first-round buyer in any of the CDOs, Merrill said; the city bought into them only after the large institutional investors who first bought them sold their holdings.
It is up to a city's treasurer to make sure its investments are appropriate, according to Cahill and other officials who are responsible for city or state monies.
Springfield Treasurer Salvatore R. Calvanese's signature appears on the Merrill Lynch account documents.
But there were four people in the room when Merrill Lynch and two other Wall Street firms made their pitches in November 2006 for the city's cash management business, including Calvanese and the man who is now executive director of the control board, Stephen Lisauskas. The state-run control board, which has overseen Springfield's finances since 2004, did not review the investment decision, current and former board members said.
The bidding process was informal, documents obtained by the Globe in a public-records request show. In fact, there was no competitive bidding process by the city, but rather a decision to invite the three firms to make presentations.
A local broker for Morgan Stanley brought charts showing typical returns for government bonds and money-market funds, in the 4.6 percent to 5.3 percent range. A Springfield broker from UBS Financial Securities Inc. showed similar products, and included in his proposal a copy of the Massachusetts statute that limits municipalities' cash investments to safe, conservative accounts.
Such funds, the law states, should earn the "highest possible rate," while taking account of "safety, liquidity, and yield." Specifically, the money should be invested prudently, at a low risk of loss, and should be in accounts that the city could cash out of within 365 days.
The third broker, Carl J. Kipper, came from Merrill Lynch's Albany, N.Y., office. Kipper knew Lisauskas, having worked with the control board member's wife in the past. Kipper brought a package that showed rates no higher than 5.2 percent. The choices were unglamorous - money markets, US government debt sold by the Treasury, and highly rated debt from large, well-known companies.
Nowhere in his proposal did the words "collateralized debt obligation" appear.
The city of Springfield's lawyer, Edward M. Pikula, said city officials did not receive or read a written description of Centre Square until Merrill's assistant general counsel, V. James Mann, sent the 235-page offering document to them in November, in response to concerns raised by the treasurer.
Said Pikula, "There is no written record of a financial disclosure [of the CDOs] until the private placement memorandum of Nov. 29, 2007."
Had they read it earlier, they would have seen on page 13 that Centre Square securities could involve "a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved." In addition, the memorandum said there could be "no assurance" of a market to exit the securities.
Reading a prospectus is a basic duty of a treasurer before making any investment, a number of city and state officials said. Calvanese declined to be interviewed. But city officials and lawyers briefed on the situation said Calvanese and others who weighed in on hiring Merrill Lynch relied on the firm's assurances that the investment met the legal standard for safety and prudence.
In Mann's Nov. 29 letter to Calvanese, he said, "The current lack of liquidity for this security was not anticipated at the time the City made its investment - it results from an unexpected confluence of market conditions."
He said that, until August, it had been possible to trade in and out of Centre Square and other CDOs, but that the market had dried up, making it impossible to sell the securities without taking a loss.
The losses on the city's books are, for now, paper losses. That is, there is no real loss unless the city were to sell the CDOs now for a poor price. In theory, if the city holds onto its investment until, and if, the market improves, it could recoup the original funds it invested. To date, the investment is still paying income, as promised, because the underlying mortgage notes are still earning interest.
It appears from letters between Calvanese and Merrill Lynch that the treasurer took Centre Square's AAA ratings - the highest available - to mean the investments were low-risk. It's a common misconception with these complex securities; in fact, the rating agencies are evaluating the likelihood of the security to keep paying interest and principle on time - not the market value of the security itself.
It's a little like assessing the ability of a homeowner to make his or her mortgage payments. That's separate from judging the market value of the homeowner's house - or whether it can be sold at all.
This month, Standard & Poor's, the bond-rating agency, put a number of CDOs, including Centre Square, on a negative watch, meaning there is now concern about those income streams going forward. The AAA ratings remain for now.
Michael D. Conrad, treasurer and collector for Worcester, said he hires only banks to manage that city's cash.
"I don't know a lot about these CDOs," Conrad said. "We all got somewhat educated by the fact of what happened in Springfield. It was probably some type of AAA-rated security, so it may have been thought of as safe. But I would never look at something to that effect."
Beth Healy can be reached at email@example.com. Steven Syre of the Globe staff contributed to this report.
"Ties alleged between broker, official"
Posted by The Republican Newsroom January 18, 2008 22:26PM
By PETER GOONAN, firstname.lastname@example.org, The Springfield, Massachusetts, Republican
SPRINGFIELD - The executive director of the Springfield Finance Control Board said Friday he is confident review of a nearly $13 million investment loss of city funds with Merrill Lynch will show his own actions were proper.
Stephen P. Lisauskas offered the comment in response to the assertion by City Councilor James J. Ferrera III that Lisauskas had friendship ties with a Merrill Lynch agent, Carl J. Kipper, who invested city funds.
Lisauskas declined comment on any ties, but said, "I am confident that a review will find that I acted properly."
The state attorney general and secretary of state's office are investigating the investment, and the secretary of state has subpoenaed two Merrill Lynch agents who handled city funds: Kipper, of the Merrill Lynch Albany office; and Manuel Choy, of Clifton Park, N.Y.
Lisauskas knows Kipper, and when Lisauskas worked as Natick's deputy administrator more than two years ago, he suggested the Natick town treasurer call Kipper with regard to a possible investment, Natick Treasurer Robert A. Palmer said Friday.
Natick opened an account with Kipper, but never put money in it, opting to go with commercial banks instead, Palmer said.
In addition, The Boston Globe reported Friday that Lisauskas worked with Kipper's wife, Maureen, in the late 1990s at the New York office of the state comptroller.
Ferrera said the state agencies need "to do their investigation and put the pieces of the puzzle together."
"For some reason, it just doesn't pass the smell test for me," Ferrera said of the city's choice of Merrill Lynch.
When asked recently by The Republican about his relationship with Carl Kipper, Lisauskas said, "There is no inappropriate relationship. There is nothing that was taken by anybody on the city or control board side that was in any interest but the public interest."
The city used two firms for its investments in the past, Morgan Stanley and UBS. It added Merrill Lynch, through its Albany office, after all three companies made presentations to city officials. The four-member review committee included Lisauskas, according to city records.
The investment of $13.9 million with Merrill Lynch last spring was directed to funds tied to the troubled subprime mortgage market, and plummeted in value to approximately $1.2 million by the end of November, city officials said.
The city is seeking full reimbursement from Merrill Lynch, claiming the firm was responsible for investing the funds in avenues not permitted by state law. Merrill Lynch denies responsibility, saying the city made the investment decisions.
Christopher F. Gabrieli, chairman of the control board, declined comment regarding Lisauskas, Kipper or Ferrera.
"We are not going to comment on issues that may be directly related to the investigation or issues that are handled by routine confidential procedures such as personnel," Gabrieli said.
City Councilor Timothy J. Rooke said Friday he has full confidence in Lisauskas, believing his action in areas such as public pensions and health insurance have saved and generated millions of dollars for the city.
"Unequivocally, I would personally stand by and support any decision that Steve Lisauskas would make as executive director," Rooke said. "The political maneuvering going on to try to blame the control board and Steve Lisauskas is embarrassing the city and the business community."
Mayor Domenic J. Sarno left his comments to a press release, stating in part, "I will work with the Offices of the Attorney General, Secretary of State, and State Auditor to advocate on the City's behalf; evaluate internal control; and ensure integrity in financial management systems. I will also make certain that results are fully disclosed to the public. The taxpayers deserve nothing less."
"State bailout for Salem schools near: Layoffs delayed as final touches are put on loan"
By Erin Ailworth, Boston Globe Staff, January 26, 2008
SALEM - Layoffs in this city's financially troubled public schools were postponed yesterday, hours before they were to go into effect, as state and local officials put the final touches on emergency legislation to allow Salem to borrow up to $1 million.
School officials announced that the layoffs would be delayed by at least a week, delivering the news yesterday by school loudspeaker, telephone, and in person to worried teachers, other employees, students, and parents. About 45 of the 60 job cuts were due to take effect at the end of the day, with more happening on Wednesday.
The extra week will allow school and state officials to work out the details of the special legislation and decide how many jobs can be saved in the school system, which has about 750 full-time employees.
"It's an emotional roller coaster: up and down, up and down. I was emotionally prepared for [my last day] today," said Arabelis Luciano, a teacher's aide who had been told she would be losing her job at Bates Elementary School. "It's just like, either tell me or - I don't know. I would love to stay but . . . everything has been up and down. . . . And the kids, they're just breaking down."
The expected state loan approval marks a dramatic turnaround for the school system, which initially faced elimination of the equivalent of about 80 full-time jobs after auditors discovered a $4.7 million deficit in the $43 million school budget late last year. Superintendent William J. Cameron Jr. announced the layoffs Jan. 7. Since last week, approximately $300,000 has been collected to avert about 15 of the proposed job cuts, including private donations from businesses, colleges, and families with children in the schools.
Much of the original shortfall was previously covered using city funds, renegotiated contracts, and other cost-saving measures, but a $1.2 million gap remained, resulting in the layoffs.
Yesterday, city and state officials said the borrowing approval would probably protect teachers' jobs, but they cautioned that it might not prevent other threatened layoffs in the school system.
"Half a million would eliminate the reductions in teachers, and there's a possibility of raising that limit to address some of the other concerns," said state Representative John D. Keenan, whose son is a second-grader at Bates. "It would be a huge turnaround. . . . Half a million is not a lot, but when you are already halfway through the year, it's hard to make up, outside of reductions in force."
In a separate interview, Cameron said: "I'm hopeful. I think I can say this. . . . I'm hopeful that we will see no reduction in our teaching staff."
City officials have publicly said that the shortfall was caused in part by a former school business manager who used money from this year's school budget to pay off old bills.
This week, at the request of the School Committee, Salem police began investigating Bruce Guy, who is also a former city finance director, to examine whether municipal finance laws were broken. Guy has not responded to the Globe's repeated requests for an interview.
The Salem loan plan began to come together Thursday when Mayor Kim Driscoll went to the State House to attend Governor Deval Patrick's State of the State address. There, she discussed the problem with Senate President Therese Murray, House Speaker Salvatore F. DiMasi and others, according to a statement from Driscoll's office.
Later, Driscoll also spoke with officials at the state Department of Revenue and the Executive Office for Administration and Finance.
Lieutenant Governor Timothy P. Murray said in an interview that the state stepped in largely because the troubles appear to stem from what he called malfeasance in the district's financial department.
"This was a unique situation," he said. ". . . It was not a pattern of poor fiscal management.
"It was an individual who purposefully misled and presented inaccurate figures" to school and city officials, Murray said, referring to Salem's former school business manager.
Emergency state assistance is unusual, but not unheard of. The city of Springfield, facing widespread financial troubles, received a $52 million loan in 2004, for example. Other municipalities facing financial troubles have been given permission to borrow, as Salem may be, as well, state officials said yesterday.
Because municipalities are prohibited by law from spending when they have a deficit, Salem needs state approval to borrow the funds to spend. The Legislature is expected to file the legislation next week.
Cameron and Driscoll said they think it was the community's largesse that persuaded state legislators to step up.
"It just spurred them to see what opportunities we might have to ease the pain," Driscoll said yesterday. "Initially, they were very clear that there were not dollars to bail out communities when these things occur."
"We don't know what the long-term solution will be. We're ready to authorize $500,000 to $1 million in borrowing as an immediate fix," said state Senator Steven C. Panagiotakos, chairman of the Senate Ways and Means Committee.
Meanwhile, teachers and other school staff are in limbo until legislators vote to approve Salem's special legislation.
"A lot of people have been through a lot of drama over the last few weeks," said Joyce Harrington, president of the Salem Teachers Union. Her organization represents 490 teachers and 160 paraprofessionals.
"People have become hopeful again," Harrington said. "I hope, I hope and pray that people aren't being given a false sense of hope, because I don't think that after these last three weeks that people can go through this again."
She added: "If you have ever been into a school and especially an elementary classroom, it doesn't just get put together overnight, so people have been wondering: 'Should I dismantle my classroom? Should I prepare my classroom [for more students]? Should I prepare for a different grade level?' People have just been torn in a million pieces.' "
Frank Phillips of the Globe staff contributed to this report. Erin Ailworth can be reached at email@example.com.
"Mayor Sarno unveils $532 million budget"
By The Republican Newsroom, Thursday May 22, 2008, 7:02 PM, By PETER GOONAN, firstname.lastname@example.org
SPRINGFIELD - Mayor Domenic J. Sarno today presented a $532 million budget proposal to the City Council for the new fiscal year, beginning July 1, saying it avoids layoffs, maintains basic services and provides more police officers on the streets.
The $531,965,502 budget will be reviewed by the council, which can recommend cuts, and would then be submitted for approval by the city's Finance Control Board. It reflects an increase of $22.9 million, or 4.5 percent, over the current budget.
Sarno said he prepared a tight, balanced budget with his finance team, cognizant of the possibility of reductions in state aid.
'Storm clouds looming'
"With these storm clouds looming, I have opted to spend conservatively now in order to protect the city as we move toward an uncertain future," Sarno said.
The budget, however, is based on the assumption that the city will be allowed to pay back a $52 million state loan over a 20-year period, rather than a five-year period currently required by the state. The city has budgeted $2.6 million as a first-year payback, but would be required to pay $6.4 million the first year if the extension is not granted by the governor and Legislature.
The control board allowed the mayor to draft the new budget, marking the first time that he and elected officials were given that authority since the state-appointed board took over fiscal control of the city in 2004. The board has stated it will support the city's recommended budget providing that it is balanced and based on realistic projections of revenues and expenses.
50 new patrol officers
Sarno said there will be 50 new patrol officers on the streets under the budget, when counting five officers who recently transferred to the force from Chicopee, a new academy class of 32 officers beginning in June, and plans to place civilians in 13 Police Department jobs, freeing up the police officers now performing those duties.
In addition, the budget continues to count on revenue from a $90 annual trash fee, pending a new fee being developed that would charge residents based on the amount of trash generated. Sarno had campaigned against the trash fee last year, but said this week he it is necessary for now, pending the "pay-as-you-throw" system.
More details in The Republican tomorrow (5/23/2008).
"Patrick to proposed extending Springfield payback"
The Associated Press
Thursday, June 05, 2008
SPRINGFIELD, Mass. (AP) — Gov. Deval Patrick is proposing legislation to give Springfield more time to pay back a $52 million state loan and improve the city's financial management.
Leslie A. Kirwan, Patrick's secretary of administration and finance, told The Republican of Springfield that the bill being introduced today will help the city avoid the fiscal troubles that led it to seek state aid four years ago.
Patrick plans next year to disband the state control board that has overseen the city's finances since 2004.
The bill would extend the payback from five to 12 years. Mayor Domenic Sarno has said that's important for balancing the city's $532 million budget for the upcoming fiscal year.
The bill also proposes a binding referendum to allow Springfield voters to double the mayor's term to four years, and creates new city financial management positions.
Information from: The Springfield Republican, www.masslive.com/news/
Flak about cuts builds on eve of governor's visit to Western Mass.
by The Republican Newsroom Wednesday July 16, 2008, 8:06 PM
By DAN RING
BOSTON - Gov. Deval L. Patrick is facing growing criticism in Western Massachusetts for cutting state money from local programs to fight crime, create jobs, care for the poor and help disadvantaged youths.
He made the cuts on Sunday when he vetoed $122.5 million from the state budget approved by legislators for the fiscal year that began on July 1.
Patrick vetoed $250,000 for AWAKE, an anti-violence program in Springfield that will close if the cut stands. He also eliminated $50,000 for "a safe zone" program for teenagers at the Dunbar Community Center in Springfield, $75,000 for surveillance cameras in downtown Springfield, and $125,000 for a program by the Affiliated Chambers of Commerce of Greater Springfield to assist small businesses located in vacant storefronts.
"It's a slap in the face," said Mario L. Hornsby of Springfield, who has joined AWAKE (Alive with Awareness, Knowledge, and Empowerment). "It's disheartening; it hurts this city."
His son, Mario, an honor student and basketball captain, was shot and killed on May 17. Police said he was shot accidentally when bullets were fired into a group in a gang-related incident.
Two men have pleaded innocent to murder counts.
Hornsby said that Patrick's cuts do not jibe with his speeches and proposals about helping poor people, boosting the economy, and improving cities such as Springfield.
The cuts come as Patrick is planning a major visit to Western Massachusetts tomorrow.
He is scheduled to attend a closed meeting of a statewide anti-crime council in Springfield, lead an open cabinet meeting in Amherst, and host a town-hall style gathering at 6 p.m. in Holyoke's Heritage State Park.
Patrick said on Sunday that the state is facing a possible recession which could mean a serious decline in tax revenues.
"Many programs had merit," said Cynthia M. Roy, the fiscal spokeswoman for Patrick, today.
"We can't afford to fund them all, given the fiscal challenges. Times are tight and we had to prioritize. ... These decisions are never easy. They certainly are not painless."
She said the administration is proud of the significant investments in the state's $28.1 billion budget for public safety, education, and communities.
Hank J. Porten, president and chief executive officer of Holyoke Medical Center, which serves some of the poorest people in the state, said he was struggling to understand why Patrick vetoed $2 million for the hospital to train nurses.
"We're very disappointed," he said.
Porten said that most patients are on Medicaid or Medicare, neither of which is fully reimbursed by the federal government.
David C. Scanlin, executive director of Kamp for Kids in Westfield, said Patrick's veto means that the camp will be unable to serve about a dozen youths, including some who are disabled and others who belong to lower-income families. Patrick vetoed the camp's $50,000 earmark in the budget.
"I'm really surprised at these kinds of cuts," said Scanlin, whose 33-year-old, nonprofit organization serves people from 27 communities in Western Massachusetts.
Allan W. Blair, president of the Economic Development Council of Western Massachusetts, said he was surprised by Patrick's $125,000 veto of the council's marketing and advertising effort. Patrick let stand $125,000 of the $250,000 state legislators approved for the program.
With the economy weakening, it is the wrong time to cut back on marketing, Blair said. "We're the only entity in Western Massachusetts that does economic-development marketing on behalf of the entire region."
Chelan D. Brown, executive director of AWAKE, said that Patrick's $250,000 veto would shut down the organization.
"It was devastating to us when we heard there was a veto," she said.
The state Legislature can restore the governor's cuts with a two-thirds vote in each branch. Rep. Cheryl A. Coakley-Rivera, D-Springfield, said yesterday the overrides could start next week.
Here is a list of some of the $122.5 million in vetoes issued Sunday by Gov. Deval L. Patrick from the state budget approved by the Legislature:
$4.1 million for the University of Massachusetts system
$125,000 for the Massachusetts Career Development Institute in Springfield
$250,000 for the operation of Alive with Awareness, Knowledge and Empowerment, an anti-violence group in Springfield
$250,000 for a statewide program to prevent bullying in public schools
$100,000 for the Reunion Center and a youth project in Easthampton
$100,000 for the Indian Orchard Main Street Partnership in Springfield
$545,195 designated in a contract for Open Pantry Community Services in Springfield
$2 million for Holyoke Medical Center, which provides training for nurses and other health professionals through affiliations with colleges
$50,000 for Girls Incorporated of Holyoke
$150,000 for the Naismith Memorial Basketball Hall of Fame in Springfield
$250,000 for the New England Farm Workers Council in Holyoke
$10,000 for Palmer's annual winter festival
$20,000 for a youth program in Palmer
$69,837 for Westfield State College
$167,235 for Greenfield Community College
$428,674 for Holyoke Community College
$469,405 for Springfield Technical Community College
$125,000 for a program by the Affiliated Chambers of Commerce of Greater Springfield
$75,000 for installing a video surveillance system to deter crime in the central business district of Springfield
$35,000 for the Holyoke Creative Arts Center
$50,000 for CityStage in Springfield
$150,000 to Shutesbury for improving Lake Wyola
$25,000 for a group to promote and host an air show at Westover Metropolitan Airport in Chicopee
$100,000 for an international marketing campaign at Old Sturbridge Village
$100,000 for Square One, formerly known as the Springfield Day Nursery
$50,000 for Franklin Community Action Corp. for a youth program
$150,000 for the World is Our Classroom, which serves Chicopee, Greenfield, Holyoke and Westfield
$100,000 for Springfield Neighborhood Housing Services to develop new housing, prevent foreclosures, assist new home buyers and create construction jobs
$50,000 for the Hungry Hill Development Corp.
$50,000 for Kamp for Kids in Westfield
$50,000 for Westhampton to renovate the town library
$50,000 for the Italian Cultural Center of Western Massachusetts
$100,000 for the Spirit of Springfield
$300,000 for the Sturbridge Heritage and Preservation Partnership
$75,000 for Wendell for a grant for emergency assistance
$50,000 for a merry-go-around at Heritage State Park in Holyoke
$50,000 for the historic Hadley Hall in Hadley
$30,000 for the Pioneer Valley Visitors and Tourist Information Center in Greenfield
$125,000 for the Western Massachusetts Economic Development Council for marketing and advertising
$25,000 for the Southwick Cultural Council
$175,000 for the Puerto Rican Cultural Center of Springfield
$50,000 for the Dunbar Community Center in Springfield to operate a safe zone program for teenagers
$50,000 for the Spanish American Union in Springfield
$35,000 for the Monson Bellman Inc. to support museum activities.
Posted by margieeeee on 07/17/08 at 8:45AM
I know that many are upset with these cuts, but I think they are necessary. The people of Springfield should be doing more volunteer work. Why not volunteer for some of these programs to keep them going? Why shouldn't the students of Springfield volunteer so that younger kids can still have programs?
There was a time in America/Mass when people didn't demand pay for what they did in the community. If we want to help these organizations then step up to the plate. These organizations can tighten their belts like the rest of us. Instead of upgrading computers, they can deal with the old ones for a bit longer.
Posted by hillsidegal on 07/17/08 at 9:13AM
Most of these programs (Open Pantry, AWAKE) ARE run by volunteers - but they need funding for the daily expense of running their programs. Are you going to dig deep into your pockets to fund it?? I'm ashamed I voted for the man... Springfield is going downhill into violence and joblessness and this certainly isn't going to help us.
Posted by PrecEisner on 07/17/08 at 9:25AM
Gee, Boston screwing Western Mass. And everyone is surprised about this because ... ???
Posted by capace on 07/17/08 at 9:40AM
Hello, there's no money to fund all the programs. Let's repeat that phrase "there is no money"...the only way to do this, that is fund programs that people want, is to borrow money, i.e., debt.
So here's the choice, increase the state's debt burden or cut spending. After this choice, it boils down to priority, which programs get funding with any money left over?
Problem for the City of Springfield, is that it squandered grant applications (i.e., money or funds) ...it lost paper work, didn't follow through on applications and simply didn't have a system (still doesn't) to seek out grant programs. That's a self inflicted problem that other towns and cities do a much better job.
Here's another problem, tax revenues are down. Tax revenues are income. Taxes are down because foreclosures are up. Tax revenues are down because jobs have left the state. Tax revenues are down because we are in a recession where consumer expenditures are down; hence, less sales taxes collected. Consumer spending is down, in part, because fuel costs have risen.
This is a fiscal squeeze. The party is over, time to buckle down with reduced spending and creative ways to restore the states revenue.
As for Springfield, it has several options. Number problem is crime and crime is fed by warehousing low income only Section 8 voucher renters. Here is the rub, according to a 2003 Federal Audit report, some 86% of the voucher given by the Springfield Housing Department were in violation of the Federal Governments mandate to ensure that such vouchers are used in housing that met safety and health standards. 86% of the vouchers did not meet that standard. What this means is that the Springfield Housing Department has subsidized the perpepuation of sub standard housing conditions in Springfield...Stop this cancer, and you will help to reduce crime (i.e., crime increases when you warehouse low income only subidized Section 8 residents, that's an emperical fact. Look to Longhill Street and Central Streets for the empirical data. Stop this cancer, and people will want to live in Springfield, i.e., taxes reveneue will increase.
Support rail by writing to the State Transportation committee to fund commuter service between Springfield and Hew Haven & Springfield and Boston, and you will see "income" increase dramatically in Springfield.
It is not enough for our public officials in Springifeld to support rail, they need to lobby the State transportation committee directly for this. Supporting and actually getting to the construction stage are two different things. Rail.
Volunteers. Great. But most people in Springfield are on welfare, and are only looking out for their pocket books on the back of the tax payers. They come here from other countries because they have targeted states and cities with the highest levels of public welfare. Sorry, volunteers are needed where people are not seeking to take advantage of the system.
I could go on and on, but the fiscal mess we are facing is based on spending patterns that cannot be sustained. Time to cut spending or raise revenue.
Posted by renewourcity on 07/17/08 at 11:06AM
In regards to AWAKE and Open Pantry, what positive results have been achieved. More tax dollars are being squandered year after year. These poverty programs and some others do little to serve the public interest. In fact, they may even enable and encourage clients to not become responsible and self sufficient. Springfield will be better off if the state does not continue to fund the local poverty industry.
Posted by patriot1948 on 07/17/08 at 11:36AM
The Governor should cut more of these earmarks. Unfortunately, the legislature will just override the cuts.
Funding programs like AWAKE is crazy. These anti-youth violence type programs pop up on a regular basis and have absolutely no effect on the quality of life in Springfield. These programs give a few people an opportunity to make some money and feel good about themselves. It's simply throwing taxpayer money down the drain.
Get a bigger sharper knife Gov. Patrick and cut even more of these boondoggles out of the budget.
Posted by miramesa on 07/17/08 at 11:46AM
So what *IS* being funded?
Inappropriate? Alert us. Post a commentPosted by jttesq on 07/17/08 at 1:00PM
1)Capace, I would argue MOST people in Springfield are not on welfare.
2) PrecEisner, There were over $122,500,000 in tax cuts. The Wmass cuts listed total $12,380,346 or slightly less than 10% of the total cuts. This is hardly Boston "screwing over" WMass. Essential state services had to be maintained. We can't criticize Pres. Bush for creating a record deficit by overspending and then criticize Gov. Patrick for refusing to create a huge state deficit.
3) As for the comments that the programs "fund the local poverty industry" and "do little to serve the public interest", such assertions are ridiculous. While the programs do offer assistance and have some success, such programs in themselves obviously cannot be expected to completely solve society's problems. (Especially in light of their meager resources.) While in better economic times such programs should receive state funding, in a time of dwindling state revenue resources, the state must prioritize by funding essential state services first.
Posted by renewourcity on 07/17/08 at 2:12PM
Success should be measured by how much the need for assistance has been reduced not increased. Continuing to provide housing and shelter while the recipient misuses alchohol and or drugs does not help the client. If a welfare or SSI check is already being received why is additonal assistance needed. I hear that many of the homeless population are children. That's even more reason to investigate if a check is already being issued for their benefits.
The state would be wise to audit, examine and inventory the poverty programs in Springfield. I suspect what will be uncovered is abuse by some clients and some overstaffed, overpaid, ineffective agencies.
Posted by lhsguy on 07/17/08 at 2:23PM
wow, we are screwed. as it is springfields already a dangerous city and they're just making it a whole lot worse. why did patrick have to make these cuts? the money was there he just didnt wanna use it? is that the case.
"National upheaval, local shudders: Credit woes convulse plans of cities, towns"
By John C. Drake, Boston Globe Staff, October 3, 2008
Springfield Mayor Domenic Sarno said the city has been waiting a long time to repair sidewalks and tear down abandoned buildings in his financially beleaguered city. Now residents will have to wait a little longer.
With the crisis on Wall Street, the first-term mayor's promises to pay for improvements on Springfield's streets are on hold because raising money by floating municipal bonds in this climate is prohibitively expensive, he said.
It is the kind of problem facing dozens of communities, say officials. Like a hurricane swirling offshore, the financial crisis is barreling down on Massachusetts cities and towns, but no one knows yet how bad the damage could be.
Local leaders this week have been nervously eyeing bailout negotiations on Capitol Hill, the freezing bond markets, their falling pension fund values, and the State House, where Governor Deval Patrick may eventually decide to seek local aid cuts.
The moribund credit markets are making it difficult to pay for capital projects such as road work, because credit is either unavailable or rates are too high, local officials and municipal finance observers say.
"I'm trying to be fiscally prudent while at the same time trying to drive an ambitious agenda," Sarno said. "It does affect Main Street, whether people are calling for a pothole or a multimillion dollar project they want improved."
Boston has so far not been affected because it usually issues general-obligation bonds in February or March, said the city's chief financial officer, Lisa Signori. But other cities and towns were looking to enter the bond market sooner.
"Communities that have been planning on issuing debt for a large municipal project - a police station, a school, infrastructure improvements - are likely monitoring the situation and waiting to issue debt, waiting for the market to stabilize and for banks to issue credit again," said Geoff Beckwith, executive director of the Massachusetts Municipal Association.
Sarno said Springfield has a wish list of capital improvements totalling $470 million, with $23 million on a high-priority list. Projects that could be affected range from sidewalk repairs and planned demolitions of derelict buildings costing tens of thousands of dollars to a major renewal for Springfield's South End estimated to cost $6.2 million.
Quincy Mayor Thomas P. Koch said funding for ongoing construction of a new Quincy High School and other projects, including a planned new middle school, could be affected.
"You don't put the bond out at once. You borrow periodically and then float the bond," he said. "We're working with the state on an application to replace the middle school and we're going to market soon with the bonds for that. Some of the other improvements at other buildings may just have to wait a little bit."
Officials at the Massachusetts School Building Authority, which has committed to help dozens of communities build schools, have sought to assuage concerns.
"The MSBA's financial obligations to school construction projects will be met despite the current economic turmoil," the authority said in a statement provided by spokeswoman Carrie Sullivan on Wednesday.
Municipal pension funds, which are invested in a vast array of stocks, bonds, and other securities, are another significant source of worry.
"Clearly this is not good news and is not a good market and there will be some loss of value that will appear on the books," Beckwith said. "The question is, will that value be recovered before the pension system needs to access those assets."
Signori said Boston's pension board would be briefed by financial advisers next week on the state of the city's investments. "Certainly, this quarter's performance is important, but what you're looking at is what's happening over five years or over ten years," she said.
Other Boston city accounts and investments are considered secure because the city collateralized them in the late 1990s, meaning the investments are backed up by cash from other banks and not subject to ceilings on federal deposit insurance.
"We weren't out there to make a lot on high interest rates; we wanted to make sure our money was safe," Boston Mayor Thomas M. Menino said this week. "The city of Boston's money is safe."
But Menino and Signori acknowledged the city's finances could be hurt if revenue from motor vehicle excise tax and hotel-motel excise taxes are down and if local aid takes a hit. Projected local aid for Boston already had fallen $60 million from 2002, Signori said.
Quincy Mayor Koch said he was worried the city's retirement board could seek more city funding if its investments are hurt.
"If the retirement board does not get back the returns they anticipate, that means they're going to be asking for more appropriation level on the operations side," Koch said in a phone interview. "That bears watching, big-time."
John C. Drake can be reached at email@example.com.
"Ware seeks federal bailout"
by The Republican Newsroom,By CHRIS HAMEL, firstname.lastname@example.org
Wednesday December 03, 2008, 10:11 PM
WARE - If congressional leaders read their mail carefully, they may be persuaded by the Board of Selectmen's chairman to rescue Ware financially rather than the nation's automakers.
Gerald L. Matta wrote a letter on Monday to U.S. House Speaker Nancy P. Pelosi and U.S. Senate Majority Leader Harry M. Reid, in which he asks that federal revenue sharing be reinstituted to assist cities and towns nationwide in the current economic downturn.
"We will soon be putting together a fiscal year 2010 budget to operate our small Town of Ware, Mass., and will be forced to make significant cutbacks and possibly eliminate some vital services to our citizens," Matta wrote.
Town Manager Steven C. Boudreau has warned town officials and residents since summer that a fiscal 2010 budget shortfall of as much as $1.5 million to $2 million is on the horizon. Town department heads already have submitted to Boudreau proposed budgets that reflect cuts for fiscal 2010, which will begin on July 1, 2009.
Matta closes his four-paragraph letter by saying that before Congress approves a bailout of the auto industry, the body should consider resuming a federal revenue sharing program that would send back taxpayers' dollars to the nation's cities and towns. Federal revenue sharing was in place from 1972 to 1987.
America's three major automakers - Ford, General Motors and Chrysler - are slated to meet today and Friday with congressional committees to pitch again their request for $25 billion in loans to get them through the current economic slump. Congress previously agreed to bail out the nation's financial institutions.
Matta said Tuesday night that he hatched the idea for the letter on Nov. 22, after becoming incensed about the bailouts and requests for more of them. He said that after consulting with Boudreau, he toned down an initial draft of the letter, but declined to elaborate about the original content.
"I was hot under the collar," Matta said. "I feel the little people always get hit. Who bails out the (business) person on Main Street (in Ware), if they go under?"
He said that he is uncertain whether Pelosi or Reid will respond personally, or even see the letter. He noted that it may not get beyond their aides.
He also forwarded copies of the missive to U.S. Rep. John W. Olver, D-Amherst, who represents Ware, and U.S. Sens. Edward M. Kennedy and John F. Kerry, both Massachusetts Democrats. He said he decided against sending a copy to President-elect Obama, because he felt such a move would be premature, given that Obama has not been sworn in yet.
The five-member board, which also received a copy, did not vote publicly to support the letter. But Matta said that he received informal support from each member, after privately discussing the letter with each of them.
"31 more municipal workers laid off in Springfield"
By PETER GOONAN, email@example.com, The Republican Newsroom, Friday, March 27, 2009, 10:07 P.M.
SPRINGFIELD - The city laid off 31 more employees Thursday and Friday, with one result being an immediate reduction in hours at the central library and nine branches.
It was the second round of layoffs in two weeks, now totaling 49 among all municipal departments. The city anticipates laying off up to 40 more employees in coming weeks in response to a $4.6 million reduction in state aid.
All libraries were closed Friday due to 15 layoffs Thursday and two prior layoffs March 13, creating the need to reorganize staff, said Library Director Emily B. Bader. The layoffs included two managers, four clerical workers and professional staff such as librarians and library aides.
From today, each branch will be open 18 hours a week over three days. The branches were previously open 24 hours a week over four days. The central library is open 12 fewer hours a week, including not being open Fridays.
A staff meeting Friday was "pretty somber," Bader said. "This is a very close-knit group and I think people in many ways were in mourning" for colleagues, she said. "Also, I think this a very committed group of people that understand they will be able to provide fewer services than they would like to. The public will really feel the effect." The layoffs leave the libraries with 80 employees.
This year's $4.2 million Library Department budget was reduced by $311,305, triggering the layoffs and other cuts. The materials budget was cut by $54,000, and cuts will be repeated next year, Bader said. Patrons can expect fewer new books and other materials, and a longer wait for those that are acquired, she said.
"I think everyone is committed to doing their very best, in terms of public service, that they can with the dollars available to us," she said.
Mayor Domenic J. Sarno said the layoffs are among difficult decisions being made in response to major cuts in state aid this year and further cuts expected next fiscal year.
On Friday, the city laid off 11 employees in the Department of Parks, Buildings and Recreation Management; three in Personnel; one in the clerk's office; and one in the Election Office. Layoffs on Thursday and two weeks ago affected Public Works, Parks, Animal Control, the Law Department and the libraries.
Sarno's communications director, Thomas T. Walsh, was asked by The Republican for a list of employees laid off and positions eliminated. Late Friday, Walsh said the information was not yet available.
The city also continued steps to eliminate the forestry division, laying off a 28-year veteran worker as it moves to have tree removal and trimming fully handled by contractors. The worker, Robert J. O'Brien, said Friday he expects to have "bumping" rights upon appeal, taking another job in the Park Department.
A City Council committee had urged Sarno in a 3-0 vote Thursday to delay the forestry layoffs, saying analysis of privatization was incomplete.
O'Brien said he does not believe the city's estimate that it can save $200,000 a year by using only outside firms for forestry. City finance officials defended the analysis, saying it included salaries, health benefits, pension costs and various other factors.
"As a taxpayer I'm furious, because I know what we do every day, and I don't know how it can be done cheaper," O'Brien said.
"After 5 years, Springfield to govern on its own"
By Associated Press, Saturday, June 27, 2009, www.bostonherald.com - Local Politics
SPRINGFIELD — A new era is about to begin for the city of Springfield.
A state-controlled board that oversaw the city’s finances for the past five years goes out of existence Tuesday. The board was formed in 2004 when the state lent Springfield $52 million to keep the deficit-ridden city out of bankruptcy.
Gov. Deval Patrick will preside over a ceremony dissolving the board. But the governor says the state won’t walk away from its third-largest city.
First-term Mayor Domenic Sarno said Springfield was "on the ropes," but has started punching back.
UMass professor Robert Forrant — who recently published a book about Springfield — credits the control board with restoring fiscal stability. But he says the city will continue to face problems unless it can solve underlying economic problems.
"Massachusetts Taxpayers Foundation says unfunded retiree health care liability is growing for towns and cities"
By Jim Kinney, The Republican, January 22, 2012
SPRINGFIELD – This city has $761.6 million in unfunded liabilities for municipal retiree health benefits, which works out to more than $12,000 in unfunded liabilities per single-family home.
Holyoke has $300 million in unfunded liabilities, working out to about $18,000 in unfunded liability per single-family home, or about 59 percent of Holyoke’s median household income, according to a study recently released by the Massachusetts Taxpayers Foundation.
The foundation, a Boston-based independent, nonprofit organization that conducts research on state and local taxes, government spending, and the economy, says the liabilities are not some hypothetical obligation but represent actual amounts taxpayers owe in today’s dollars for retiree health-care benefits already earned by current retirees and eligible employees and payable during the next 30 years.
For the study, the foundation calculated the cost per single-family home by figuring out how much of each city’s budget comes from real-estate taxes on single-family homes then applying that ration to each city’s liability.
“It is a classic problem of the public sector,” said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation. “You vote for all these benefits knowing the cost will be in the future. But of course you are not going to be in office by then.”
Cities and towns are now taking a “pay as you go” approach, paying the cost of retiree health benefits each year, but setting no money aside to cover future costs that Widmer expects to rise with the growing cost of medical care.
Springfield’s pay-as-you-go cost is $25 million a year, according to Widmer. Holyoke’s is $7 million a year.
The foundation’s study looked at 10 of the largest communities in Massachusetts of Springfield, Holyoke, Worcester, Pittsfield, New Bedford, Lowell, Lawrence, Haverhill, Fitchburg and Boston.
Researchers found that homeowners of just those 10 cities face either paying an average of $13,685 now to fund the liability, or an average 20 percent tax increase over the next 30 years.
The study focused on those cities as a means of illustrating the problem, one which looms in nearly every municipality in the state, Widmer said.
Cheryl A. Dugre, executive director of the Holyoke Retirement Board, said cities just never funded the program.
“They should have funded it years ago,” she said. But, Dugre said, she doesn’t know of any plan in Holyoke to address the issue.
Springfield is studying the problem in hopes of coming up with a list of solutions, said William E. Mahoney, the city's Human Services Director. The best tonic would be a recovering economy which would increase local tax revenues.
Carolyn C. Ryan, policy analyst for the taxpayers foundation, said only two cities in the state have started planning for their health-care liabilities: Wellesley and Needham. “And, both those places are very wealthy communities,” she said.
Springfield has 3,800 municipal retirees. Employees qualify for health-care coverage in retirement after 10 years of service and upon reaching the age of 55 or after 20 years of service and retirement at any age. Rules vary slightly for members of the police and fire departments.
“We have had years of skyrocketing health-care costs,” he said. “Those liabilities never go away.”
Mahoney and Widmer both said health-coverage for retirees is most expensive for those age 55 to 65. Once a retiree hits age 65, Medicare becomes the primary insurer and the city’s plan takes on a secondary role.
There are solutions, according to Widmer.
First, people covered by municipal health-care insurance typically pay less for care than those with private coverage. He says municipalities should have plans that more closely reflect the private sector, a move that would increase the cost of health care for municipal retirees.
Ryan said the problem will be helped by a state reform measure passed over the summer that takes health-care costs out of the collective-bargaining process for municipal-worker unions.
Also, health-care benefits should be earned in phases over a longer period of time, like pension benefits accrue over time, Widmer said. Ten years is just too short a period of time in which to earn a benefit as valuable as lifetime health-care coverage, Widmer said.
“You have scads of people who work 10 years then retire at 55 and use this medical care from 55 to 65 before they are eligible to collect Medicare,” Widmer said.
It may also be time for cities and towns to review retirement ages in light of changing demographics, Widmer said.
“People today are starting new careers at 65,” he said. “If they are alive at 55, they are going to live into their 80s; most people will anyway.”
- Jonathan Melle
- Amherst, NH, United States
- I am a citizen defending the people against corrupt Pols who only serve their Corporate Elite masters, not the people! / My 2 political enemies are Andrea F. Nuciforo, Jr., nicknamed "Luciforo" and former Berkshire County Sheriff Carmen C. Massimiano, Jr. / I have also pasted many of my political essays on "The Berkshire Blog": berkshireeagle.blogspot.com / I AM THE ANTI-FRANK GUINTA! / Please contact me at firstname.lastname@example.org
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