Notes provided by: Cindy Friedman

School Committee Meeting November 4, 2003

Present: Entire School Committee Alan Tosti Chairman, Mary Ronan and Dick Fanning Finance Committee (FinCom) Members

Discussion of Reserve Funds.

Mary and Dick are FinCom representatives responsible for looking at the school budget. The funds talked about were Stabilization, Overlay Surplus and Free Cash.

Key Points from Alan:

1. Reserves have been used as one shot money as opposed to funding continuous services (i.e., a budget shortfall in a given year as opposed to employee contracts which are a continuous expense).
2. Overlay Surplus is responsibility of Board of Assessors and is used to rectify problems with property value assessments. Size of fund needs to go up in a property assessment year because there are more challenges to the assessments by property owners and therefore the potential of more money need to be reimbursed by town.
3. Have been spending the reserves from '01 - '03. Free cash has not been replenished due to:
   1. less money being saved at the end of the year from departments (because less money was in their budget to begin with) and
   2. town receipts were down so there was less to add to free cash account. We spend about 1/2 of what's in reserve and since 2000, when the fund was at $5M, we've spent half each year without adding back into it. (MY UNDERSTANDING OF THE NUMBERS HE STATED - MY UNDERSTANDING MAY BE WRONG!!!)
4. Having money in reserve funds is one of key factors that go into maintaining credit rating. A good credit rating makes borrowing money less expensive for the town. One year of deficits probably won't affect credit rating. Three to four years of deficits will affect credit ratings. Arlington already showing a three year downward trend.
5. Some FinCom members think town is using too much of the reserve funds.
6. All contracts (teachers, police, fire, etc.,) expired in June '03 and are up for renewal this year.
7. Money saved in health care cost reduction could be used to fund continuous services.
8. Arlington has not received any payments from the state this year for past school renovations and reimbursements are being cut (this year by 1%) by the state - first time since 1948 that that has happened. Some FinCom members worry about putting more schools under construction without getting any state payments for money already spent.

All the school committee members asked questions to understand how the reserve funds are used and funded and what the issues were with using the money.

Two specific questions on using the reserve funds were:

• From Sue Scheffler: If a coalition of town boards (school committee, board of selectmen, etc.) could agree on a long term plan for funding contract would the FinCom feel okay about using the reserve funds in the short term to get over 1 year of shortfall?
• From Kay Donovan: Would the FinCom be able to support a plan that that would provide an increase in salaries that would more than cover the increase in health insurance costs to teachers. This would compensate teachers for the previous years in which they accepted lower salaries due to good health insurance benefits.

Alan's response to both of these questions was that the FinCom will consider any proposal that is in the best long term financial interest of the town. If these ideas meet that criteria they are more than willing to look at them.

There was further discussion about why Arlington's local aid is being cut but I don't understand the details enough to give a synopsis of the discussion.

These are my notes, taken to best of my ability and are no way official minutes or notes of any of the boards or individuals sited in my report. If I got anything wrong please let me know and I'll fix them.

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SPOT is an organization of concerned parents and community members who are interested in full, equitable and sound financing of our public education.
We regret any errors and omissions.