Dr. David Hopson
12 Littleville Rd
Huntington, MA 01050

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March 24, 2008

Spring has arrived, at least by the calendar, and that means that annual town meetings will be here shortly. With the joint resolution from the House and Senate, the district and towns are now assured of the amounts of local educational and lottery aid that they will receive—a great improvement over waiting for the entire state budget to be approved. While the amount of aid is still much less than what our schools and communities need in order to address the inequities of school funding, I am thankful that it is not a reduction.

In addition to the Gateway operating budget, the district has also requested that the towns put an article on their annual warrant relating to a ‘Capital Improvement Stabilization Account’ as authorized by Massachusetts General Law. As explained last year, this account would enable the school committee to set aside unused money from extraordinary maintenance accounts. This money could be used for large-scale capital projects such as recoating the middle school roof rather than having to bond the recoating or replacement of said roof, thus saving bonding and interest expenses. Under the law, the school committee would have to have a 2/3rds vote to expend money from the stabilization account and list a specific purpose. The towns would then have the opportunity, through their select boards, to allow the expenditure or to hold a special town meeting to vote on this expenditure within 60 days of the school committee vote. If no town votes the item down, or if towns elect not to hold a special town meeting, then the money can be spent for the specific purpose it was voted out of the stabilization account. As with the Excess and Deficiency Fund (E&D) the school district can have no more than 5% of its total budget in the stabilization fund.

To put this in perspective, I’ve spent some time on the Department of Revenue’s website exploring the financial aspects of our seven member towns. A town’s ‘free cash’ is unrestricted funds from the previous fiscal year that were not expended towards town operations (previous year’s free cash, receipts in excess of estimates for revenues and unspent money in line items expenses). The average ‘free cash’ amounts for our seven towns over the past seven years has ranged from a low of 10.77% to a high of 15.04% (FY’07 averaged 13.45% or $385,510 per town, with FY’08 amounts ranging from $108,646 to $924,037, for those towns presently certified). In addition, most towns have a reserve or stabilization fund where they accumulate amounts for capital or other future spending purposes which is limited to 10% of the community’s equalized value. This has averaged between 8.79% to 15.04% for our seven towns from FY’00 to FY’07 (with FY’07 amounts averaging 13.45% or$385,466 dollars per town). Combined, the average of free cash and stabilization accounts for our seven towns for fiscal years 2000 to 2007 has been 25.25% of their total budgets, while the district has been limited to no more than 5% of our budget. Even approving a stabilization account would, at best, enable the district to put aside an additional 5% to be used only on capital projects, with the probability of saving the towns money over the long term.

I applaud local town officials for the many hours that they spend trying to put together a budget that works for our towns. As is evident from the amounts of free cash and stabilization funds that are found in our district, and from the depressed economy and aid from the state, our towns have done very well in terms of balancing budgets. If you look at cities and towns throughout the state, there are some with negative free cash funds over a course of several years. We’ve only had two towns that had a negative free cash balance and that was only for one year each. This speaks volumes for the professionalism and hard work of town officials who are, for all intents and purposes, volunteers. As we go into developing our town budgets for FY’09 with Municipal Growth Factors in our seven towns ranging from 3.17% to 7.72% we will again be faced with some difficult choices.

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