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.
5 comments:
A litt;e sarcastic don't you think? What about the shock and dismay regarding the circuit breaker money. I mean paying teacher's salaries is such a misuse of money slated forthe schools.
My purpose in writing this blog is to get fellow residents engaged and interacting (thanks!) - a little sarcasm and humor seem to help get people to read and respond...
My post wasn't intended to defend anyone's comments or complaints about the circuit breaker money; I was simply responding to John's letter in the Townsmen about the Free Cash account.
The circuit breaker money "flap" is a telling indication of how much room there is for improvement in how the town boards and committees work together. My personal revelation from that experience is I (as a member of teh Finance Committee) am not doing as good a job as I should in following the complex month-by-month financial operation of the school department. I went back looking, and found documentation from a School Committee meeting last August that clearly identified the above-expected circuit breaker payment, and the decision to save it for future use rather than reduce using it to reduce the expenditure of tax revenue dollars. The big question for me was "Why didn't *I* realize this money was there until sometime in January??".
Thank you. Perhaps you could let the Townsman and rest of the community know that to help diffuse the last of trust issue.
How refreshing to hear you say that! Now if we could get others to take some responsibility rather than point fingers, we'd get somewhere.
I appreciate the fact that you admit that the information was, in fact, available in regard to the circuit breaker money. It is too bad a certain Selectmen made it sound so negative in the newspaper. I don't suppose that Selectmen would like to retract his statements and that indeed they should have known that the money was there and being saved for future use.
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