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Finance Committee Approves Reserve Fund Transfers

(Black text is mostly objective, red text is mostly subjective in nature.)

Finance Committee met tonight to review several transfers out of the reserve fund. Every year Town Meeting appropriates a few hundred thousand dollars into a reserve fund. The finance committee approves transfers out of the fund into regular budgets as requested by various departments. Some transfers were made earlier in the year, but most transfers happen at the end of the year as budgets reach a close.

First up was Treasurer Stephen Gilligan. He wanted $10,000 to complete a system that will permit the town to accept payments online. He spoke for several minutes about the system and answered several questions about the project and how much it had cost. I think that his has been a poorly planned and managed project. Regular readers of my blog know that I’ve been critical of the high cost and poor accountability of the town’s IT expenditures; this project is a poster child of IT dysfunction. As an example, I point something that the treasurer said in his transfer request that “training is not contemplated” and “bug fixes are not contemplated.” Of course there will be bugs! It’s nuts not to plan for them. I’m sure we’ll end up paying more for this before we’re done, but I think we’re finally reaching the end of it. The change we made this spring to put IT under the Town Manager will help. I’m not interested in fighting this particular budget battle. I’m much more interested in preventing this type of purchase from happening like this in the future..) I proposed that we approve the transfer, include a comment that we think the purchase could have been done better and more cheaply, and require that future expenditures of this type go through the Capital Committee (and therefore, by referral, the ITAC committee). During discussion more than one member argued that the transfer be disapproved until the current spending has been further reviewed. My motion was approved 14-1.

The second request was from the Town Manager. Deputy Town Manager Nancy Galkowski walked through the $500,000 defiicit, the $280,000 in budget transfers, and the $230,000 in reserve fund transfers that were requested to cover it. The larger items included paying out vacation and sick time for several senior retirees in the police department, overruns in the fire department’s overtime department, and last year’s retirement of the director of human services. The DPW budget made up $200,000 of the transfer and Comptroller made up $80,000. Here is the handout with some more detail. There was lengthy discussion about how the town should account and budget for vacation and sick time liabilities. There was a lengthy discussion about how to more accurately budget the overtime budget in the fire department. I agreed with something that Charlie Foskett said. This is yet another reason to move from the current budget method towards a budget that shows “fully loaded” salary, health care, and retirement costs. In the current budget, town departments’ budgets show only salary costs. The health care and retirement costs are in separate buckets. That means that a department can find $50,000 for salary and hire someone, but the town pays more than twice that because of non-salary costs. A “fully loaded” budget would mean that departments would have to find the full cost of hiring in their budget, not just a fraction. The transfer was approved unanimously.

The committee gave the chair permission to transfer funds up to a certain amount, and up to $25,000 if the vice-chairs agree, during the summer in the event of an emergency.