Friday, October 10, 2008
Finance Committee to release zero-growth guideline
[Ed note: for a glossary of financal terms, click on “Resources” at www.carlislemosquito.org.]
The Finance Committee (FinCom) will be sending out its preliminary guideline for FY10 soon, and once again departments are being asked to keep spending flat. There is some good news in real estate growth, but uncertainty about state aid, rising fixed costs, and the need to build reserves in preparation for a Carlisle School building project have dictated a cautious approach to any increased spending.
Chair Dave Model, in a phone conversation Tuesday, noted that new construction is projected to add $15 million to the tax base this year. This is an increase over last year’s $8 million, but a significant drop from the $20 to $30 million added each year from FY04 to FY07. Local receipts, including permitting fees and automobile excise taxes, are expected to decline slightly. State aid is a big question mark; for now FinCom has assumed that it will be consistent with FY09’s numbers.
In total, revenues are projected to rise about 3%, but offsetting this are a number of increasing fixed costs. County retirement and other benefits are expected to rise about 8% to almost $2 million. Debt service net of state reimbursement is projected at $1,062,736. Once these costs are accounted for, the increase for all other budget lines, including schools, is about 0.63%.
Management of reserves
Free Cash has in the past been a source of funds for the operating budget. This year Carlisle has $1 million in certified Free Cash, but Model cautions that with a new school building on the horizon, it might be better to put some of those funds aside. “It’s very important a well-run town have a strong balance sheet,” he says, pointing to the current uncertainty in the capital markets and the possibility of a credit freeze. Carlisle’s reserves, including the Stabilization Fund, are now in the 8 to 9% range. Reserves of 10 to 15% are recommended by bond services such as Moodys and Standard and Poors. “We need $300,000 just to get to the low end,” says Model. He expects the FinCom will recommend transfers from Free Cash to the Stabilization Fund over the next three years.
The Concord-Carlisle Regional High School (CCHS) assessment ratio varies with the proportion of enrolled students from Carlisle and determines Carlisle’s share of the CCHS costs. The ratio is slightly down for Carlisle this year. However, it is expected to rise in coming years from 28% to above 31%. Each percentage rise shifts about $50,000 from Concord to Carlisle. Model notes that this is another reason to hold onto reserves.
Model notes that the Concord-Carlisle Regional School Committee (CCRSC) is ahead of us in their work on a budget for the high school. That committee has asked for a 5% increase and notes that teacher contracts drive most of that cost. “They can’t cut bodies due to maximum class sizes,” says Model. The Concord FinCom has proposed a 4% increase. Under the regional agreement, the two towns must pass consistent budgets at Town Meeting and the polls, but given that Concord is several times the size of Carlisle, it is usually the leader on where the CCHS budget ends up.
The difficult FY09 budget adds to the pressure on FY10. Last year the town operating budget was kept flat, with the exception of an override for the high school. However, even the high school suffered as the small increase was largely consumed by a spike in special education costs. Regular education was cut by 1%, and maintenance investment was largely deferred. One of the operating items in the high school budget this year is $1 million in maintenance.
The Carlisle Schools are currently negotiating salaries for FY10. Student population, which was down about 50 students this year, is expected to keep declining. Twelve positions were cut last year, and depending on the contract, further job loses may be necessary.
On the town level, most departments were forced to cut elsewhere to maintain personnel last year. “A second flat year puts some pressure, maybe too much pressure [on town departments],” says Finance Director Larry Barton. Model notes that reducing hours or regionalizing some services may be the only long-term options. With six towns bordering Carlisle, could some services be shared?
Tough choices ahead?
Model says that unless the economy improves and real estate growth returns, setting priorities will be important in the coming years. Do townspeople value schools over maintaining rural character? Are reasonable taxes more important than in-town services? Where Carlisle’s citizens have formerly been able in say “all of the above,” choices may now be necessary. Model argues for greater citizen involvement, “We want to hear from voters. It’s not the role of elected or appointed officials to make those decisions.”
A joint Carlisle/Concord FinCom meeting held Thursday, October 9 will be broadcast repeatedly on CCTV. It will include the regional school committee’s response to an initial round of meetings held in September, where Concord indicated a 4% guideline for the high school and Carlisle indicated a 0 to 2%. ∆
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