When Bill Pennington met with the Board of Selectmen and Finance Committee on Wednesday, he said that he intended to withdraw his private article for a Proposition 2 1/2 override at Town Meeting, but that the article regarding a transfer of the Phillips Academy contribution fund to operating budgets might still be an option for the voters to consider. Vikki Gallagher expressed a similar sentiment in her letter to the Townsman yesterday.
It's easy to understand why some might look at the roughly $1M in this fund and consider it a 'quick fix' to some of our budget deficit problems for FY09. In reality, using that money to fund operations budgets really would be a quick "fix", helping get the town more addicted to a drug that we seem to like the taste of. Each year in recent history we have taken money from our "reserves" - money that has no recurring source of renewal, similar to our personal savings account (or credit card), and spend it on stuff we gotta have. The more fixes we take of this drug, the more we get hooked, and the more we focus on how to get our next fix, without taking responsibility for how we're going to cope financially with our nasty habit.
Andover's financial problem isn't really the $2M+ dollar gap between recommend department budgets and the available revenue that we face this year. The problem is that we have, for several years, chosen at Town Meeting to authorize more expenditures than we can truly afford. The gap last year was several hundred thousand dollars, and we collectively gasped as we said "okay, just one last time." Now the gap is a couple million, and the best estimate we can make today indicates that the gap will be over FOUR MILLION dollars next year.
Each time we take reserves to fund our operational budget, it increases the gap between "level services" and "available revenues" the following year. If the residents of the town vote to sustain the growth of the operational budget, they should take the responsible path and approve a Proposition 2 1/2 override. Eroding our dwindling reserves will only sustain our habit for very short time, and then we'll face a staggering deficit with nothing to fall back on.
The Board of Selectmen and Finance Committee both passed motions Wednesday to recommend that Town Meeting approve the transfer of the Phillips Academy fund into the Stabilization Fund. It's the sensible choice.
Friday, March 21, 2008
Thursday, March 20, 2008
Slushy cash?
John Zipeto's letter to the Townsman claims that the Free Cash account is really a town "slush fund". He exposes the fact that "It has been financed annually by a systematic over-budgeting of certain town departments. It has been going on for years."
Wow. This finally explains why 'certain' town departments are just rolling in cash each year...
John is quite correct that the town tries to budget conservatively for projected expenses. After all, if a department claims that it costs "X" to get a job done, then runs out of money before they've accomplished the task, then the voters would be justifiably disappointed. At the end of the year, if the department finished the year without expending the money that was budgeted, the excess is "returned" to the Free Cash account.
Note that Town departments cannot move money around between accounts at will, so if a sum is budgetted for, say Printing expenses, and they find a more economical way to get the material published than planned, the excess money cannot be shifted to some other use, such as staff salaries or new computers. The excess money gets returned to Free Cash at the end of the year.
John is correct that there is a secret plot within town management to squirrel money away into Free Cash. It says so in the Town Manager's budget document, on page 192 (great place for secrets - who would look there?!). Why would the town management ever do such a thing? It's a conspiracy with financial rating services like Moody's, who tempt towns into such devious practices by offering them higher bond ratings when they do so.
John is also quite correct when he says that the proceeds of this heinous process would go along way towards eliminating the funding gap in FY09. In fact, the Town Manager's budget recommends using $1,680,000 of this slush fund to do just that in FY09. In fact, the town has been using Free Cash to support the operating budget for years, which is one reason that the account is critically low today, and probably heading lower next year.
The tricky part about this slush fund, though, is the fact that Town Meeting actually has to vote on every appropriation of funds out of that account. It's really a crazy idea for a pot of money that's supposed to be hush-hush. That's why every year the Finance Committee publishes a lengthy description of the Free Cash acount in the core section of the budget article material (page 27 last year), describing the purpose, history, significance and a detailed accouting of balances and appropriations from Free Cash over the prior 10 years.
And I agree again with John that the Finance Committee and Board of Selectmen should (continue) to express shock and dismay over the abuse of Free Cash by the systematic over-spending on operating budgets that cannot be paid for with available revenues.
Wow. This finally explains why 'certain' town departments are just rolling in cash each year...
John is quite correct that the town tries to budget conservatively for projected expenses. After all, if a department claims that it costs "X" to get a job done, then runs out of money before they've accomplished the task, then the voters would be justifiably disappointed. At the end of the year, if the department finished the year without expending the money that was budgeted, the excess is "returned" to the Free Cash account.
Note that Town departments cannot move money around between accounts at will, so if a sum is budgetted for, say Printing expenses, and they find a more economical way to get the material published than planned, the excess money cannot be shifted to some other use, such as staff salaries or new computers. The excess money gets returned to Free Cash at the end of the year.
John is correct that there is a secret plot within town management to squirrel money away into Free Cash. It says so in the Town Manager's budget document, on page 192 (great place for secrets - who would look there?!). Why would the town management ever do such a thing? It's a conspiracy with financial rating services like Moody's, who tempt towns into such devious practices by offering them higher bond ratings when they do so.
John is also quite correct when he says that the proceeds of this heinous process would go along way towards eliminating the funding gap in FY09. In fact, the Town Manager's budget recommends using $1,680,000 of this slush fund to do just that in FY09. In fact, the town has been using Free Cash to support the operating budget for years, which is one reason that the account is critically low today, and probably heading lower next year.
The tricky part about this slush fund, though, is the fact that Town Meeting actually has to vote on every appropriation of funds out of that account. It's really a crazy idea for a pot of money that's supposed to be hush-hush. That's why every year the Finance Committee publishes a lengthy description of the Free Cash acount in the core section of the budget article material (page 27 last year), describing the purpose, history, significance and a detailed accouting of balances and appropriations from Free Cash over the prior 10 years.
And I agree again with John that the Finance Committee and Board of Selectmen should (continue) to express shock and dismay over the abuse of Free Cash by the systematic over-spending on operating budgets that cannot be paid for with available revenues.
Kudos to engaged residents
This year I have been very gratified to see so many residents going to the effort of attending the public budget review meetings for Andover. I'm sure that there are more who watch from home, but it's certainly a clear expression of interest and engagement for someone to come down to Town Hall and sit around for several hours, a couple times a week.
It's probably reckless for me to start naming people who I've noticed attending frequently, because I'm bound to offend someone by not including them. Apologies in advance.
Mary Carbone, of course, has a very long history of active attendence at town meetings. I was concerned last Fall because I hadn't seen her for a while, but fortunately she has more recently resumed her regular attendence and participation.
Over the past two years, I doubt that any 'unofficial' resident has attended more Selectmen or Finance Committee meetings than Tom Deso. In addition to the time he spends serving on other volunteer committees, Tom shows up to most board meetings as regularly as any of the board members, and has become the voice of reason that these boards frequently turn to for input. At the Joint Meeting of the Selectmen and Finance Committee last night, Tom made a simple and clear observation that swiftly concluded a 20 minute rambling discussion about tax foreclosure property sales, that could well have consumed the Board for another hour had Tom not spoken up. He is a valued contributor to the leadership of the town.
I have been particularly pleased to see John Pasquale attending the recent CIP and budget article review meetings. John has been an outspoken advocate of reason at Town Meeting for several years, and has particpated in several Selectmen meetings in the past. His engagement with the review of capital projects and warrant articles this year has been constructive and welcome. It would be great if more residents could ask their questions and make their concerns known during the review period leading up to Town Meeting, so that they could have more input to the recommendations that are put forward at the Meeting, and better informed when the time comes to vote. John sets a fine example in this regard.
Of course, the candidates for Selectmen and School Committee positions have been fairly regular in attending the budget review meetings for the past few months. They have my respect for being interested enough in the operation of the town to put themselves into the election process, and to be willing to make the commitment of time and energy that their potential roles will demand.
There are plenty of other people who have shown up to enough meetings in recent memory that I should give them mention as well. John Zipeto, Diane Costagliola, Peggy Kruse, and Bill Pennington come to mind, just to name a few more. For any other residents who feel interested and engaged in the process of making Andover 'work' - thanks!
It's probably reckless for me to start naming people who I've noticed attending frequently, because I'm bound to offend someone by not including them. Apologies in advance.
Mary Carbone, of course, has a very long history of active attendence at town meetings. I was concerned last Fall because I hadn't seen her for a while, but fortunately she has more recently resumed her regular attendence and participation.
Over the past two years, I doubt that any 'unofficial' resident has attended more Selectmen or Finance Committee meetings than Tom Deso. In addition to the time he spends serving on other volunteer committees, Tom shows up to most board meetings as regularly as any of the board members, and has become the voice of reason that these boards frequently turn to for input. At the Joint Meeting of the Selectmen and Finance Committee last night, Tom made a simple and clear observation that swiftly concluded a 20 minute rambling discussion about tax foreclosure property sales, that could well have consumed the Board for another hour had Tom not spoken up. He is a valued contributor to the leadership of the town.
I have been particularly pleased to see John Pasquale attending the recent CIP and budget article review meetings. John has been an outspoken advocate of reason at Town Meeting for several years, and has particpated in several Selectmen meetings in the past. His engagement with the review of capital projects and warrant articles this year has been constructive and welcome. It would be great if more residents could ask their questions and make their concerns known during the review period leading up to Town Meeting, so that they could have more input to the recommendations that are put forward at the Meeting, and better informed when the time comes to vote. John sets a fine example in this regard.
Of course, the candidates for Selectmen and School Committee positions have been fairly regular in attending the budget review meetings for the past few months. They have my respect for being interested enough in the operation of the town to put themselves into the election process, and to be willing to make the commitment of time and energy that their potential roles will demand.
There are plenty of other people who have shown up to enough meetings in recent memory that I should give them mention as well. John Zipeto, Diane Costagliola, Peggy Kruse, and Bill Pennington come to mind, just to name a few more. For any other residents who feel interested and engaged in the process of making Andover 'work' - thanks!
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