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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 tU CU vA O � O aCL (D � m -0 E � 0 0 06 -� C C o o — c o O -� o a _ CO 'a) OMB O O E 'O U O 0. Q} X Q� a) � � 3 4) Ln = j 'O O O � S tJ) O U O O (7 O U E RS -O a)W V 4- .� .0 a) N C3 .� - - e `O O CO W O O 4) Elf? -- EW co -� t O (CS l ..: �.. W U) -� ' N O O C Q O . -_ N r �� . co ` .tom, U) oU) aC) COCO f I 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 a andown - ���` 20-- = ­111.11 '.__..'1___­ L b� t :n. e:ta+lascuselkD �arnelf?:e eires>D +isicii-"of.t ucaiSenfcs 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.