Serving Durham, Middlefield and Rockfall
Volume 17, Issue 6
Contingencies, reserve funds, surpluses: What do they have to do with my taxes? By Stephanie Wilcox Town Times
This week Town Times invited District 13 business manager Ron Melnik, Middlefield finance director Joe Geruch and Durham finance director Maryjane Malavasi to help us understand their respective budgets — specifically reserve funds, contingency funds and surpluses — in hopes that taxpayers would find it useful. Here is what we learned. When looking at a budget, whether it is the town or school budget, remember that “one number does not tell the whole story,” said Malavasi. This is particularly important when looking at contingency and reserve funds. The towns of Durham and Middlefield have a contingency fund and a reserve fund. However, the school district is not allowed to have a contingency fund, so they operate with a reserve fund only. A contingency fund is a budgeted amount to cover unexpected costs of any kind. The towns can and do budget for contingencies, but the number cannot be more than three percent of total expenditures by state law. Durham’s contingency fund is $115,000 and Middlefield’s is $50,000 in their 2010-11 budgets. The reserve fund can also be used to meet unexpected costs, but this account cannot be budgeted for. It is filled by surpluses from previous years as well as unexpected income, such as more building department fees than expected or a higher tax collection rate than budgeted. A surplus from the current year goes into the reserve fund in the next fiscal year. Towns can carry over these surpluses in a reserve
fund while a regional school district cannot; therefore District 13 uses those funds as income against expected expenses for the next budget year. Here’s where the towns are intertwined with the school district: Durham and Middlefield are responsible for the entire education budget even though it is developed and voted on separately. In other words, both towns are ultimately responsible to cover the Board of Education’s bills when it comes to an unanticipated expense such as replacement of a leaking oil tank at a school, if the district does not have enough money in its own reserve fund. “It comes from the same taxpayers, just out of a different pocket,” Geruch explained. Also, a “reserve fund balance drives what we think is like our credit score,” said Melnik. This means the towns and school district need to consider that lenders look for both consistency and an adequate amount to cover emergencies in reserve fund balances. “If we don’t have enough money in a reserve balance, then when we go to borrow money, we will pay a higher interest rate,” explained Geruch. That higher interest rate is, in effect, the price of budgeting really closely and not having much reserve fund balance. The Board of Education has recently been criticized for carrying a reserve fund balance that some feel is “too high.” Melnik says that the number has been this “high” before, but the economy has usually looked better than it does now so people weren’t focusing so closely on it. The proposed 2010-11 education budget See Taxes, page 17
Friday, May 21, 2010
Long ago and not so far away
Korn School third graders visited the Middlefield Historical Society recently. Above, Kyle Bubier tries on a World War II hat. Below, Netta O’Connor of the society shows Liliana King a typewriter while Thomas Vallone looks on.
Photos above by Susan Berry
Middlefield town budget meeting suspended again By Chuck Corley Special to the Town Times
Middlefield’s annual town budget meeting reconvened in a near-empty auditorium on Monday, May 17, as the budget is still not fully ready for presentation to the town. The meeting was opened and closed in order to satisfy the town charter requirement that the town meet every Monday until a budget is approved. And why is the budget not ready yet? It seems to come down to two things: the as-yet-unap-
proved school budget, and the town’s anticipated payment to MIRMA. Unfortunately, the school budget won’t be voted on until Tuesday, May 25, one day after the suspended town budget meeting is required to convene. However, even if the Board of Finance completes the town side of the budget during their May 20 regular meeting, the selectmen (who call town meetings) have decided to wait till the following TUESDAY, June 1, (Monday is a legal holiday) to actually attempt to hold a vote on the town budget – with or without an approved school budget.
First Selectman Jon Brayshaw said it was “fairer” to the voters to allow them to have sufficient time to look over the budget documents beSee Town meeting, page 12
In this issue ... Arts...................................22 Calendar ............................4 CRHS Honor Roll ............23 Durham Calendar ...........16 Libraries ..........................16 Middlefield Briefs.......12-13 Pet Fair ............................20 Sports...........................24-25
As a highlight of their Colonial studies, Ricki Barton and Alexander Kulasenski were invited to try on colonial style children’s clothing by a presenter from Plimouth Plantation.