Agenda:
7PM Revenue Projections (Ed)
7:30 Net school spending (Ed/ Manny)
Voke assessment
Impact of enrollment changes
7:55 Capital needs for schools (Dr. Russell)
Pothole money discussion,
8:15 Stab fund policy (Greg)
8:30 Executive Session on Contract negotiations (town wide parameters for upcoming contracts)
9:00 Adjourn
A draft of Stab fund policy for consideration...
...Finance Committee Stab Fund Policy
Background
A healthy fund balance provides a cushion in the event of natural disasters and stabilizes our budgets against slumps in local revenues and unexpected cuts in State Aid funds in times of extreme fiscal stress. It enables us to save significantly on our General Liability insurance’s by using higher deductibles and insulates us against large and unexpected court judgments as well as large and continuing injury liabilities.
Goal:
The Town should maintain a balance in the Stabilization Fund equal to 10% of the annual operating budget. In the event that the balance drops below that amount, the town should develop a proactive plan to restore that balance as quickly as reasonably attainable, but in all cases within a maximum of five years.
To initially reach the targeted balance, the town should commit to an accelerated schedule that uses one-time revenues, during the years 2009 through 2013. Thereafter as the Town’s budget grows, the town should continue annual contributions from interest earned and additional deposits from onetime revenues as necessary to maintain a balance of 10% of the current year’s operating budget.
Uses:
Interest revenue from the stabilization fund that exceeds the required contribution shall be treated as a one-time revenue and shall applied to any capital projects consistent with the policy on one-time revenues. Principle in the Stabilization Fund shall only be used for the following purposes:
1 - Stabilizing the Town's finances in times of unexpected reductions in already appropriated revenues. Future Stabilization Fund targets and time lines to be adjusted to repay these monies to the fund within a five year period.
2 - Short term financing of medium sized capital projects with the intent of avoiding or reducing the borrowing costs associated with a given project. In this case, the money used should be borrowed from the Stabilization Fund and repaid on a schedule that does not exceed 5 years.
3 - Payment of unexpected legal judgments, insurance obligations or resulting from natural disasters beyond the normal capacity of the operating budget to absorb. Future Stabilization Fund targets and time lines to be adjusted to repay these monies to the fund within a 5 yr plan.
Accountability:
The Town Meeting shall be apprised of the Stabilization Fund's balance and progress toward the goal at both the Spring and Fall Annual Town Meetings along with the reasons for any failure, or expected failure, to meet the yearly target or goal and the actions taken to remedy the situation.And here is the rest.
Wednesday, November 19, 2008
Agenda for joint meeting with Finance and School Comm's
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4 comments:
How will you fund the schools? Override?
This new policy as sound as it may be is a lot of money, like 7million. How will this be explained to the public so they understand we aren't rich and hoarding. Meanwhile, how will we continue to fund public services and schools, and yes over time give people raises. This increasing the stab fund to this amount and then madatorily maintaining the balance seems a fantasy. Bill, What is the stab balance now? 3 million?
Mandatorily was the word. Seems 4 million would have been sufficient in stab, but people fear another pay out like for injured officer med expenses and CIP costs or tornado.
The current Stab fund balance is about $3.8 million if my memory serves me. I am at work and don't have the figures here. The concern expressed last night was that a catastrophic event can be very costly and if the town had adequate reserves we would be better able to weather such a catastrophe. The town will also be able to use the revenue generated from the interest on the fund for projects and can use the Stab fund money to reduce our borrowing on large capital projects and pay ourselves back.
As I alluded to in this post, I think that 10% of the operating budget is too large. I was in a minority of one on that point considering both the Select Board and Finance Committee.
One thing that I must point out is that contributions to the Stab fund come from one time revenue and therefore it would be against the adopted policies of the Select Board and Finance Committee to use those funds for recurring expense, such as wage increases. It is also bad fiscal policy to use those funds for recurring expense. Finally, appropriations to the Stab fund are not mandatory under this policy. This is a recommended course of action that the Select Board and Finance Committee have endorsed. Circumstances and the availability of funds may change what we can realistically do. Town Meeting, as legislature and appropriating authority of the town, must vote to put the money in the Stab fund.
The schools will receive the minimum required net school spending for the foreseeable future. That appropriation will come from the General Fund as in the past.
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