Against All Odds: How Springfield, Massachusetts Built a Fiscally Sustainable Future.

• Author: Plante, Timothy J.

If COVID-19 and the devastating events of 2020 had happened a decade earlier, the third largest city in the Commonwealth of Massachusetts would have completely gone under.

That was Springfield's unfortunate reality. Haunted by economic decline, poor school performance, crime, underfunded pensions, and underwhelming housing values, Springfield was simply a broken city.

Springfield's problems started back in the early 1980s when budgets were cut following the passage of Proposition 2 1/2, a Massachusetts law that limits property taxes and the ability to support core city services. By the early to mid 1990s, Springfield's police force was down to 400 officers.

In 2004, violent crime on city streets was nearly four times the national average. Businesses were decamping for nearby locations, hollowing out the downtown districts and leaving gaping economic holes throughout the city. It wasn't long before Springfield lost control of its bottom line.

For a variety of reasons, a city with a $442 million budget simply wasn't living within its means. After years of political inaction, a reckoning was long overdue. When the tab was tallied up in 2004, Springfield found itself staring down a $41 million deficit, with few prospects for getting out of the red.

State law prohibited the city from operating at a deficit, so Springfield essentially papered over its structural deficits. While the city prepared and submitted balanced budgets to the state, its account balances were negative. There's no nice way to explain this away--it was extraordinary malfeasance for a city of this size.

When the smoke cleared--that is, when a full accounting reconciliation was completed in 2004--the Massachusetts state government moved in and created the five-member Springfield Finance Control Board in return for a $52 million no-interest loan to cover the city's shortfall.

Over the following years, the Finance Control Board helped spearhead initiatives that got to some of the root causes of the city's many problems. But to be effective, Springfield needed systems to collect, store, track, and analyze city data--and it had none. Everything from revenue and expenses to reconciliations was handled through paper-driven processes and paper-reliant systems. Unsurprisingly, nothing happened in real time. Procurement and payables were routed multiple times, and approvals could take weeks. Adjustments required months.

People were making day-to-day decisions using months-old data. From an analytics perspective, there was zero visibility. The only positive aspect of the formerly manual processes and terrible chart of accounts was that it gave the finance team tremendous motivation to make lots of changes, if only to escape the painful red tape that was in place.

Revolutionary changes

In July 2007, the city implemented a financial management software program called Munis, and the data started to trickle in. Things started improving when the finance department received data it could use to proactively manage the city. It was finally possible to see the vacancies, the savings, the surpluses. Back taxes started to roll in as the city pursued and collected on liens. The finance department could inquire about a purchase, intervene on non-standard procurements, redirect budget dollars, and take corrective actions. The city could aggregate purchases, determine economic order quantities, and finally negotiate volume discounts from suppliers.

These are hardly earth-shattering improvements...