The Mayor directs the City’s financial operations. As the City’s Chief Executive Officer, the Mayor has general supervision and control over the City’s cabinet officers, departments, boards, and commissions.

The City’s cabinet form of government facilitates the execution of mayoral priorities and the day-to-day executive and administrative business of the City.

The Administration & Finance Cabinet includes the following departments, each with a major role in providing a climate of fiscal discipline: Treasury Department, Auditing Department, Assessing Department, Office of Budget Management, and Purchasing Department.

The Cabinet also includes the Office of Human Resources and the Office of Labor Relations. With employee compensation and health benefits comprising over three quarters of the City’s total appropriation, the management of these policy areas within a broader context promotes coordination and accountability across City government.

Pension Management

City employees participate in a contributory defined benefit retirement system managed by the Boston Retirement System (BRS), of which the City is the largest member. The BRS provides pension benefits to retired employees under a state contributory retirement statute administered by a Retirement Board comprised of five members: the City Auditor, who serves ex-officio; two individuals elected by members of the system; an individual chosen by the Mayor; and an individual chosen by the other four members or appointed by the Mayor if a selection is not agreed upon within 30 days of a vacancy.

A full valuation is done every two years to determine the system’s unfunded liability and the annual funding requirement. The BRS hires an investment manager to oversee the fund managers of all (non-teacher) pension assets.

The City’s pension liability is currently 74.96% funded and is on track to reduce the unfunded liability to zero by 2025, fifteen years before the legally required funding date of 2040.

Other Post-Employment Benefits (OPEB) Management

Employees earn post-employment health care and life insurance benefits over their years of active service which are received during retirement. The City, including the Boston Public Health Commission (BPHC), has an unfunded liability for these benefits of $2.3 billion as of the most recent independent actuarial valuation on June 30, 2015. Changes to retiree health benefits, the amount of the City’s annual contribution, and the discount rate used are all factors that can affect the liability.

While the City is legally required to make an annual contribution toward reducing its unfunded pension liability, there is no such requirement for retiree health and life insurance benefits. In FY08, the City followed new Governmental Accounting Standards Board (GASB) requirements to identify and disclose this estimated unfunded liability and also began to include an annual appropriation in the budget. These funds are held in an irrevocable Trust Fund authorized through the City’s acceptance of MGL Ch.32B s.20. As of December 31, 2017 the Fund had a balance of $547 million.

Contracting Procedures

The Uniform Procurement Act (the UPA), or MGL Ch.30B, creates uniform procedures for contracting services and supplies. The City’s contracting procedures conform to UPA requirements and an eProcurement system supports these efforts.

Expenditure Controls

Tight central expenditure controls allow for critical review of all non-personnel spending and the flexibility to adjust to fiscal changes or trends. Spending is monitored on a monthly basis and the City’s projected year-end position is updated using actual information. Combined with conservative revenue estimates, the City maintains a solid financial position.

Position Review Committee (PRC)

The PRC, comprised of the City’s Chief Financial Officer, the Human Resources Director, and the City’s Budget Director, is instrumental in maximizing resources in a budget where people and the benefits they carry account for over three quarters of the City’s total appropriation.

Risk Management

Through internal claims management, departmental accountability, and a structured self-insurance program, the City’s risk management strategy focuses on reducing the cost of third party liabilities, worker injuries, employee healthcare costs, and property damages. MGL Ch.258 caps legal liabilities and Corporation Counsel defends the City in lawsuits that arise from the normal course of operations.

A self-insurance program budgets for predictable levels of risk-related costs through the general fund, except for self-insured health care costs financed through trust funds established under MGL Ch.32b S.3A. The City also carries a catastrophic property insurance policy and maintains a catastrophic risk reserve for unexpected large losses.

Performance Management and Program Evaluation

Boston's performance management efforts, driven in partnership between the Citywide Analytics Team and the Budget Office, exist to ensure that the city delivers the most effective and efficient services possible. Building the tools to understand how well the city is performing, helping identify pain points and developing immediate and potential long-term performance and process improvements create lasting improvements for the city.

These efforts are summarized in CityScore and are designed to inform the Mayor, City managers, and the public about the quality of life and the performance of City government by aggregating key performance metrics into one number.

Boston About Results continues to be the city's sustainable and reliable performance management system which captures the core functions of City departments and citywide strategic goals, assists in the decision-making process, identifies areas of improvement, and effectively communicates performance results to a broad range of stakeholders.

A Citywide Analytics Team works across cabinets to help identify pain points and develop immediate and potential long-term performance and process improvements ( see featured analysis on performance management ), complementing performance reports.

Operational Reviews

The City systematically engages in independent operational reviews and other planning efforts aimed at making government more efficient in order to address areas needing renewed attention.

Energy Management

An Energy Management Unit develops design standards and implements measures that enhance the energy efficiency of the City’s new construction and capital improvement projects.

The conversion of street lights to newer fixtures using Light Emitting Diode (“LED”) technology has achieved significant operational savings.

In fiscal 2019, the City plans to begin implementing improvements which will result in utility cost savings for City facilities, under an initiative entitled “Renew Boston Trust.” This initiative is not a trust in the traditional sense, but a program to bundle municipal utility cost savings projects. The initial step was to have an Energy Service Company (“ESCO”) conducting an Investment Grade Audit (“IGA”) of the City’s facilities portfolio to identify projects with significant utility savings potential. The City expects to select projects based upon the IGA analysis and implement the program through one or more contracts with the ESCO that will provide long-term financial guarantees on the net savings for such projects. The City plans to finance the program with general obligation bonds with debt service expected to be offset by the long-term energy savings guaranteed by the ESCO.