HomeMy Public PortalAboutFiscal Year 2014 Proposed Budget Amendment 1 2'
ToWN OF
1630 WATERTOWN
Office of the Town Manager
Fr 1
Administration Building
X - 149 Main Street
Watertown,MA 02472
Phone; 617-972-6465
Pax:617-972-6404
Michael J. Driscoll www.watertown-ma.gov
Town Manager
townme atertown-tna.eov
To: Honorable Town Council
From: Michael J. Driscoll,Town Manager
Date: April 29,2014
RE: Proposed Amendment to the Fiscal Year 2014 Budget
Enclosed please find, for your review and consideration a Proposed Amendment to the Fiscal_ Year
2014 Budget. The Proposed Amendment is related to two items;
• The establishment of a Special Education Stabilization Fund; and an initial transfer of funds
thereto.
• Funding of$210,000 for One Time Curriculum Initiatives.
As you are aware, the Council's Committee on Budget and Fiscal Oversight met on March 27, 2014 to
discuss Special Education (SPED) funding and related matters with a goal of finding a better way to
fund unbudgeted and unanticipated SPED expenses without using general education funds during the
school year. (see attached Committee report)
As indicated in the attached Committee Report, a meeting will be scheduled with the School
Administration to continue the March 27th discussion. During that meeting, one of the items for
further discussion should be protocols on the utilization of a Special Education Stabilization Fund.
For background purposes on the establishment of Special Purpose Stabilization Funds, enclosed please
find a copy of the August 2008 City and Town article and the Informational Guideline Release (IGR)
04-201 regarding Creation of Multiple Stabilization Funds from the Department of Revenue.
As a follow up to discussion regarding the School Committee's Proposed Fiscal Year 2015 Education
Budget and the proposed increase for"New Goods and Services", I respectfully requested the
Superintendent of Schools identify One Time Curriculum Initiatives for consideration of funding with
one time monies.
The following"New Goods and Services"were identified as One Time Curriculum Initiatives and
mandated items:
Partnership for Assessment of Readiness for College and Careers
(PARCC)Expansion Infrastructure Updates $163,056
Special Education(SPED) $ 23,069
English Language Learners (ELL) $ 20.665
$206,790
Therefore, given all of the above, I respectfully request the attached Amendment be placed on the
April 29, 2014 Special Town Council Agenda as a First Reading amending the Fiscal Year 2014
Budget.
Given this Amendment, the Fiscal Year 2014 Revenues and Expenditures will be each increased by
$1,000,000. Therefore, the revised Fiscal Year 2014 Revenues and Expenditures are$108,206,371.
Additionally, at the May 13, 2014 Town Council Meeting in conjunction with the Public Hearing on
the Proposed Amendment to the Fiscal Year 2014 Budget, I respectfully request the attached
Resolution establishing the Special Education Stabilization Fund be considered.
cc: Honorable School Committee
Honorable Library Board of Trustees
Department Heads
FISCAL YEAR 2014
BUDGET AMENDMENT
INCREASE
REVENUE (DECREASE) TO READ
UTILIZATION OF FREE CASH $ 1,000,000 $ 2,500,000
00100970-497200
TOTAL REVENUE ADJUSTMENT $ 'i,000,000
INCREASE
EXPENDITURES (DECREASE) TO READ
TRANSFER TO SPED STABILIZATION FD. $ 790,000 $ 790,000
0194000-696807
EDUCATION ONE TIME CURRICULUM $ 210,000 $ 210,000
0194000-530333
TOTAL EXPENDITURE ADJUSTMENT $ 1,000,000
RESOLUTION# R-2014
WHEREAS, unanticipated and unbudgeted Special Education costs may arise from year to year; and
WHEREAS, pursuant to the provisions of G.L. c. 40, § 5B, the Town may establish a special purpose
stabilization fund by a two-thirds vote of the Town Council, and
WHEREAS, a fund should be considered for the purpose of supporting unanticipated and unbudgeted
costs that may arise.
NOW THEREFORE, BE IT RESOLVED that the Town Council of the City known as the Town of
Watertown hereby establishes the Special Education Stabilization Fund and appropriates thereto the
sum of$790,000.
Council Member
I hereby certify that at a regular meeting of the Town Council for which a quorum was present, the
above Resolution was adopted by a vote of_for, against and_present on May 13, 2014,
Valerie Papas Mark S. Sideris
Council Clerk Council President
Town of Watertown
Town Council Committee of the Budget and Fiscal Oversight
Report of the Meeting of March 27,201.4
Report Date:April 8,2014
The Committee convened on March 27 at 7:00 pm in the P Floor Louis Andrews Conference
Room. Present were Vincent Piecirilli, chair;Angeline KouneIis, vice.chair; Cecilia Lenk,
secretary; Town Manager Michael Driscoll;Town Auditor Thomas Tracy;Town Council
President Mark Sideris, Town Councilors Aaron Dushku and Anthony PaIomba; and School
Committee Members John Portz, Michael Shepard, and Julie McMahon. Several residents were
also in attendance. Unfortunately no one fi•om the School Administration was able to attend.
The purpose of the meeting was to discuss school special education(SPED) funding and related
matters with a goal of finding a better way to fiend unbudgeted and unanticipated SPED expenses
mid-year without using general education fluids.
Mr. Portz outlined some of the issues in developing the annual school budget and causes of
significant unanticipated changes.The SPED budget each year is created based on three
categories:
• Current SPED population with their estimate of needs the next year(currently 595
students or 21%of the district student population).
• Those current students known as being"at risk" for SPED services next year.
• An"unknown"budget amount for expected new SPED students the next year.
In FY2014, the School Department budgeted$400K for unknown SPED costs; the actual
unknown costs were about$700K. It was noted that the School Department needs to continue
budgeting for both at-risk and unknown SPED costs each year.
Mr. Driscoll recommended dialog with the Superintendent regarding costs and increases in
SPED expenses, noting it was important for all taxpayers to understand why SPED costs are high
compared to other districts.He further stated he did not believe general education fund should
cover these unanticipated costs and recommended that the Town Council consider setting up a
Special Education Stabilization Fund. He noted Belmont had created a SPED Stabilization Fund
to Rind unanticipated, unbudgeted costs(see first attachment). There was discussion among the
Committee and attendees about how such a Stabilization Fund could work. It was noted that in-
district costs need to be considered, as these can be substantial (see second attachment).
The Committee and School Committee members present supported the concept of a SPED
Stabilization Fund.The Committee agreed it needed further discussion with the School
Administration and School Committee regarding a SPED Stabilization Fund for unbudgeted,
unanticipated costs; in particular, there is a critical need to analyze five-year data and trends in
SPED costs in order to better these understand unanticipated and unbudgeted costs.The next step
for the Committee will be to schedule a meeting with the School Administration to continue this
discussion.
The meeting adjourned at 8:20 pm
Report prepared by Cecilia Lenk
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ARTICLE. To See if the Town will vote to create and appropriate money to a Stabilization
Fund in accordance with Section 5B of Chapter 40 of the Massachusetts General Laws for the
purpose of Special Education; to determine whether the money shall be provided by the tax levy,
by transfer from available funds, or by any combination of these methods; or to take any other
action in relation thereto.
A Stabilization 1{�c c vpt�lci e_e t led Epr the propose ofsui otlir naitticipated
and _ - Mx st vPgr.to year. Precise
Special Education funding is difficult to predict or project given that the changing nature
of needs of mandated Special Education services, and especially for students in out-of-
district placements that encumber tuition charges and transportation costs. Students with
special needs frequently move into Belmont subsequent to approval of the annual budget.
I C Initial funding for this Fund is proposed to derive from 200;000 appropriation of one-
time-only revenues. Establishment of the Fund requires a simple majority;however,
withdrawals from the Fund for Special Education expenditures require a two-thirds vote
of members at a regular or special.Town Meeting.
The Board of Selectmen,Warrant Committee, and School Committee will report orally on this
article.
Proposed Motion: � �o
ate,
MOVED:
That the Town establish a Special Education Stabilization Fund in accordance with
Massachusetts General Laws, Chapter 40,Section 5B, and appropriate$20w0 ram
available cash reserves to said Fund for the sole purpose of Special Education costs,
Majority vote required for passage
7 1
Specialized 609
Programs students
2013-2014 on IPPs
Connections f
#Teachers Cost #IAs Cost Total Total Per
Cost Students Pupil
Cost
5.8 347,3341 30 1 697,5271 1,044,861 1 30.5 34,258
Learning
Support
#Teachers Cost #IAs Cost Total_ Total Per
Cost Students Pupil
_ Cost
6.7 334,77-2 8 204,062 538,834 42 .12,829
Language
Based
#Teachers Cost #IAs Cost Total Total Per
Cost Students Pupil
Cost
- 12 870,017 7.2 179,427 1,049,444 142 7,390
Integrated
Services
#Teachers Cost #IAs Cost Total Total Per
Cost Students Pupil
Cost
] 5 1366,633 4.5 119,065 485,698 [ 50 19,714
� Inclusion-
#Teachers Cost #IAs Cost Total Total Per
Cost Students Pupil
Cost
j 21.8 1,548,628 53.6 1,323,624 2,872,252 ( 344.5 8,337
Navjeet K.Bal,Commissioner•Robert G.Nunes,Deputy Comfssioner&Director of Municipal Affairs
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Volume 21,No.7 August 2008 Special Purpose Stabilization Funds:
A Long-Term Planning Tool
0LS Commentary Three proposals
of interest to municipalities pushed Joe Markarian,Director of Technical Assistance,Municipal Data Management
and Technical Assistance Bureau
through the legislature at the last
moment of their two-year session: The 1945 statute that initially author- and retain interest earned. In the past,
expanded intermunicipal agreements, ized cities and towns to establish a sta- municipalities would need state ap-
a municipal spending commission, bilization fund restricted the use of any proval of special legislation to set up
and broadband funds for unserved fund balance to capital expenditures, such a reserve.
communities . . . . . ... . .. . . .. . . .. .. 2 In 1991,permitted uses were expanded
to include any lawful purpose, but still A special purpose stabilization fund:
Best Practices Wellesley uses a funds could not be reserved for a spe- • Encourages a community to think
dashboard to stay on track with financial cif ic purpose. However with the adop- long-term. Programs to replace vehi-
planning efforts and keep all parties informed with real-time information . . .2 tion of legislative amendments to M,C.L, cles, maintain buildings and improve
Ch.40§5B in 2003,municipalities can roads require an evaluation of all assets,
Legal Somerville mayor takes the right now create multiple special purpose formulation of a replacement or repair
to appoint all the way to the Mass- stabilization funds. Each of these funds schedule, and calculation of long-term
achusetts Supreme Judicial Court can be assigned a different purpose projected costs.
and wins . ... . ... .... ... . . . .. . . . .3 allowing municipalities to take advan- . Helps a community save money.
Focus A 10-year look at Proposition 2'12 tags of a new management and fund- Rather than pay cash, if the $400,000
overrides.Afe override approvals influ- fund-
ing option. purchase price of a fire truck were bor-
enced by community size, property As a result, at a time when many cities rowed over 15 years,interest payments
wealth and the number of public and towns are faulted for operating in could add around$150,000 to the total
school children? . . . ... ... . . . .. .. ..4 perpetual crisis mode,for allowing mu- cost,depending on interest rates.Even
The Community Preservation nicipal assets to deteriorate, and for if this additional cost would have a
Act's reporting Form CP•2 gets an general short-sightedness, a special nominal tax rate impact, it can instead
update that promises to make the form Purpose stabilization fund can be an be saved or expended elsewhere.
easier to complete . . .. . . .. .. .. . .. 11 effective planning tool. • Helps a community manage debt.A
Mark your calendars for upcoming A fund might be established, for in- plan to accumulate cash over time and
training classes.. .. . .. . . .. .. .. . .. 12 stance, to pay solely for the mainte- pay outright for a moderate-range cap-
nanco and repair of municipal build- ital expenditure helps preserve debt
Profile Senior Deputy Commissioner ings, Another might be created to capacity for major, high-dollar pur-
James Reynolds celebrates 30 years supplement state highway funds, ro- chases or projects. An approach that
with the Department of Revenue and ceived under Chapter 90,and to cover balances debt with pay-as-you-go
talks about his work along the way... 13 the cost of an ongoing street improve- practices,and protects against unfore-
Municipal Fiscal Calendar ment program. A special purpose sta- seen costs is viewed in a positive light
September--October , , ,, , , , , ,, , ,, 14 bilization fund might also be set up to by credit rating agencies.
finance a government-wide vehicle re- . Builds resident confidence in gov-
placement program. For example, if a ernment. Special purpose stabilization
community anticipated the need to funds directly address resident con-
purchase a $400,000 fire truck in five cerns and provide assurance that
,,. years, it could reserve$80,000 a year
in a special purpose stabilization fund, continued on pane 9
City&Town•August 2008 Division of Local Services•www mass.govldis 9
Special Purpose Stabilization Funds continued from gage 7
money appropriated for a particular a capital project stabilization fund in Ultimately,special purpose stabilization
purpose will be used for that purpose FY2008 and town meeting votes to cre- funds are most effective as a revenue
and will not be diverted. ate the fund and appropriate$100,000 source, or savings account, for antick
Creation of a special purpose stabiliza- to it. In FY2009, $102,500 (1,025 x pated expenditures. They work best
tion fund, and an appropriation to that $100,000, 1.025 being 2.5 percent of when used to build moderate balances
fund, requires two-thirds vote of a city the original override amount) is avail- and to pay mid-level expenditures that
council, town meeting or district pru- able for"appropriation"and that entire the community will eventually have to
, , make, like building maintenance, road
dential(or similar)committee.The vote - 0.w repairs and vehicle purchases.
must clearly define the purpose of each
fund established. Under the amended ' ' ,, Building stabilization balances through
law, creating and appropriating to a .'9 + W� =x� an override unquestionably involves an
general stabilization fund now also re- � �:�� _ , increase to the tax levy,but special pur-
quires two-thirds vote. r : „ B- _ r. pose stabilization funds provide an im-
portant response to resident's concerns
There are two options for building bal- - F - about the absence of long-term plan-
ances in a special purpose stabiliza- ��• �.F �_ ,' •-�'�� � o-�,�.�, Wing in municipal government.If consid-
ered fund. One is the traditional appro- §,
priation in a budget line-item, or in an �'��� w �:�° _ �=• `� thoughtfully and implemented pru-
dently,they offer a vehicle that can help
article, from within the levy or from a community think and act in a foreword
other general fund revenues. Balances " f ' i. ° " looking manner,and effectively plan for
can also be transferred in from other � =
' ��� N�. future costs.
existing accounts.
For more information, please see the
A second new funding option is re- DOR Information Guideline Release
ferred to as an override, but in fact (IGR)04-201 which is accessible from
has characteristics of both a Proposi _M the DL5 website, Go to www.mass.
tion 2'/2 override and exclusion. Like an u i _ ov dis, click on Quick Links (more)
override,additional tax revenue can be W and then the Information Guideline Re-
raised year-after-year without town- lease link,
wide or city-wide referendum votes be-
yond the year of inception. However,, . w
like an exclusion under Proposition 21/2, 900
the levy limit increase need not be per- amount is"appropriated." For FY2010,
manent.Solely through the action each $105,062 (1.025 x $102,500) is avail-
year of the selectmen,or city council,it
able,but only$80,000 is"appropriated."
can be continued,lowered or deferred The amount available in FY2011 now
entirely and resumed in a later year. In becomes $82,000 (1.025 x $80,000),
any event,each year,the amount avail- but the selectmen choose to make no
able increases by 2,5 percent. appropriation,The amount available in e l
For example, let's say that the town's FY2012 is$82,000(1.025 x last appro-
voters approve a$100,000 override for priation made, i.e.,$80,00%
Informational Guideline Release (IGR) No. 04-201
January 2004
CREATION OF MULTIPLE STABILIZATION FUNDS
AND
PROPOSITION 21/2 OVERRIDES FOR STABILIZATION FUNDS
Chapter 46§§14 and 50 and Chapter 140§§19 and 137 of the Acts of 2003
(Amending G.L. Ch.40§5B and Ch.59§21C(g))
SUMMARY:
These guidelines explain new legislation that gives cities, towns and districts the
flexibility to create multiple stabilization funds for different purposes. The legislation
amends G.L. Ch. 40 §5B, which previously provided for a single stabilization fund into
which cities, towns and districts could appropriate monies to be reserved for future
appropriation for any lawful purpose. Under the amendment, a community may now
establish one or more stabilization funds for different purposes by a two-thirds vote of
its legislative body. It may amend the purposes of those funds at a later time in the
same manner. Appropriations both into and from the funds require a two-thirds vote
of the legislative body. Previously, appropriations to the stabilization fund only
required a majority vote. Interest earned on all stabilization funds remains with the
funds. The interest provision had been inadvertently omitted when the statute was
amended, but it was restored by a recent technical amendment and applies
retroactively. Ch. 140 §§19 and 137 of the Acts of 2003.
In addition, a new paragraph has been included in G.L. Ch. 59 §21C(g), which
authorizes a property tax levy limit override under Proposition 21/2. Under this new
provision, a city or town that has an override approved by its voters for the purpose of
making appropriations to any stabilization fund must now allocate or dedicate the
additional levy capacity resulting from that override to the same purpose in subsequent
years. Ordinarily, monies from an override are only earmarked for the stated purpose
in the fiscal year the override is effective. Two-thirds of the selectmen, town council or
city council, with the mayor's approval if required by law, must vote to "appropriate"
the additional capacity for the same stabilization fund purpose each year after the
override takes effect. If "appropriated," the assessors must raise the amount in the tax
rate and the municipality's levy limit is increased accordingly for that year. Voters may
approve a change in the purpose for which the additional levy capacity can be used in
future years. Approval of any change is by majority vote at a referendum.
These changes became effective Tuly 31, 2003. They apply to any appropriation
voted and levy limit override approved for a stabilization fund after that date.
PROPERTY TAX BUREAU DANIEL J. MURPHY, CHIEF
-2-
GUIDELINES:
I. MULTIPLE STABILIZATION FUNDS
A. Creation of Funds
Stabilization funds may be created for one or more different purposes. G.L. Ch.
40 §5B. A fund may be created for a broad category of spending purposes, e.g.,
any Iawful purpose, capital budget purposes or purposes for which the
community may borrow money. It may also be created for a specific purpose or
project, e.g., acquire a new fire truck or undertake a particular school
construction project.
Creation of a fund requires a two-thirds vote of the legislative body of the city,
town or district. The vote must clearly define the purpose(s) of the fund.
B. Pre-existing Fund
Any pre-existing stabilization fund balance should continue to be treated as a
reserve for any lawful purpose, i.e. a "general" stabilization fund. The city, town
or district can reallocate or earmark all or part, of that balance to any new
stabilization funds it creates by a vote to transfer monies from that "general"
stabilization fund to the newly created fund. See Section I-D below.
C. Changing Fund Purvose
The purpose of a stabilization fund may be changed at any later time by a two-
thirds vote of the legislative body. For example, if a community had established
a fund in order to reserve monies to acquire a new fire truck and a balance
remains after the purchase,the legislative body could vote to change the purpose
to meet some new savings objective.
If a Proposition 21/2 levy limit override was approved for the purpose of funding
the particular stabilization fund, however, the city or town must also follow the
referendum procedure explained in Section II-C below to be able to change the
fund purpose and then continue using the additional levy capacity resulting
from that override in future years.
D. Appropriations and Transfers
Appropriations into and from any stabilization fund require a two-thirds vote of
the legislative body.
-3-
Monies may also be transferred from one stabilization fund to another by two-
thirds vote. If the monies in the fund from which the transfer is made could not
be appropriated directly for the purpose of the fund receiving the transfer, e.g., a
transfer of $50,000 from a fund for a particular school construction project to a
fund to construct a new senior center, the vote also serves as a change in purpose
to the extent of the amount appropriated.
E. Investment and Interest
The treasurer may invest stabilization funds in national, savings or cooperative
banks, Massachusetts trust companies, federal savings and loans associations
located in Massachusetts or securities that are legal investments for savings
banks under Massachusetts law.
All interest earned on the investment of stabilization funds belongs to the funds,
The treasurer may pool monies from all stabilization funds for investment
purposes, but the accounting officer must account for them separately in the
general ledger and allocate interest earned on the pooled monies proportionately
to each stabilization fund.
F. Limits on Funds
1. Annual Avorovriations
Total annual appropriations to all stabilization funds are limited to 10
percent of the prior year's tax levy. This includes "appropriations" of
additional levy capacity resulting from Proposition 21/2 overrides
approved for the funds. See Section II-B below. The limit on total
appropriations may be exceeded with approval of the Director of
Accounts.
2. Balance
The total of all stabilization fund balances cannot exceed 10 percent of a
community's equalized valuation.
II. STABILIZATION FUND OVERRIDES
A. Presentation and Avvroval of Override Referendum
Cities and towns may ask voters to approve a Proposition 21/z levy limit override
referendum for the purpose of funding any of the stabilization funds it
establishes.
-4-
If approved, the additional levy capacity is earmarked for the same stabilization
fund in the fiscal year the override is effective and subsequent years. G.L. Ch. 59
§21C(g).
Therefore, the amount of any override for a stabilization fund must be clearly
identified, preferably by presenting a separate override question for each
stabilization fund being funded, For example:
Shall the city/town of be allowed to assess an additional
$100.000 in real estate and personal property taxes for the purposes
of funding the municipal capital stabilization fund for the fiscal
year beginning July 1, ?
Shall the ci town of be allowed to assess an additional
$100,000 in real estate and personal property taxes for the purposes
of funding the school capital stabilization fund for the fiscal year
beginning July 1, ?
If the amount is included in an override for multiple purposes, however, the
exact amount allocated to the particular stabilization fund must be stated. For
example:
Shall the cityZtown of be allowed to assess an additional
$1,000,000 in real estate and personal property taxes for the
purposes of funding the town and school operating budgets, the
municipal capital stabilization fund ($100,000) and the school
capital stabilization fund l$100,0001 for the fiscal year beginning
July 1, ?
B. Appropriation of Override in Future Years
1. Annual Appropriation Procedure
In the year the override is effective, the appropriation of the funds
generated by the override to the particular fund is made by the usual
appropriation procedure, i.e., a two-thirds vote of the legislative body.
Each year thereafter, however, the selectmen, town council or city council,
with the mayor's approval if required by law, must decide whether to
"appropriate" any of the additional capacity resulting from the override
for the same stabilization fund purpose. A two-thirds vote is required to
make any "appropriation".
-5-
2, Approoriation Amount
All or some of the additional levy capacity may be "appropriated." In the
first year after the override is effective, the additional levy capacity that
may be appropriated is 102.5 percent of the override amount. In
subsequent years, it is 102.5 percent of the amount of additional levy
capacity appropriated in the last year it was appropriated.
For example, a $100,000 override is approved for a school capital project
stabilization fund for fiscal year 2005 and the legislative body
appropriates the same amount from that year's tax levy for that purpose.
In FY2006, $102,500 is available for "appropriation" by the selectmen, town
council or city council,with the mayor's approval if required by law. That
entire amount is "appropriated." In FY2007, $105,062 (1.025 x FY2006
appropriation of$102,500) is available,but only $80,000 is "appropriated."
The amount available in FY2008 now becomes $82,000 (1.025 x FY2007
appropriation of$80,000). No appropriation is made in FY2008, however.
The amount available in FY2009 is $82,000 (1.025 x last appropriation
made,i.e.,FY2007 appropriation of$80,000).
3, Tax Rate
The assessors must raise the amount "appropriated" in the tax rate. This
"appropriation" is reported on page two of the tax rate recapitulation
under "Other Amounts to Be Raised" and documented by a certified copy
of the "appropriation" vote, as explained in the annual tax rate
recapitulation instructions issued by the Bureau of Accounts.
4, Levv Limit Calculation
The municipality's levy limit for any year is increased by the amount of
additional levy capacity that is appropriated for the stabilization fund
purpose. The new limit must still be within overall levy ceiling of 21/2
percent of the full and fair cash value of taxable property.
C. Chancre in Override Purpose
1. Presentine Referendum
The selectmen, town council or city council, with the mayor's approval if
required by law,may ask the voters to approve a change in the purpose of
the override. This change can result in the additional levy capacity being
allocated to another stabilization fund or to any other municipal purpose.
A two-thirds vote is required to place the referendum before the voters.
-6-
2. Referendum Form
The following question form should be used to present a referendum to
change the override purpose:
Shall the city/town of be allowed to
change the purpose of a Proposition 21/2 override
referendum approved at an election held on
for the (capital stabilization fund)
to the following new purpose(s): for the
fiscal year beginning July 1, ?
3. Referendum Approval
The referendum is approved if a.majority of those voting on the question
vote "yes."
4. Appropriation in Future Years
If the purpose of the override is changed to another stabilization fund, or
other purpose, the additional levy capacity would have to be
"appropriated" to the new purpose each year or the levy limit would be
reduced. See Section II-B above.