May 162014

The Groton-Dunstable Regional School District’s Fiscal Year 2014 is likely to be remembered by Groton and Dunstable residents for a long time, including its reluctance to actually end.

In March, the Groton-Dunstable School Committee “closed” the FY 2014 budget and sent it to each member town’s Board of Selectmen for certification.

Then, two weeks ago, the School Committee reopened the FY 2014 budget to apply the remaining balance of the G-DRSD Excess and Deficiency (E&D) fund, $613,533, to help close out the year. Made on the recommendation of Budget and Finance Director Jared Stanton, the vote raised the 2014 budget to a final figure of $35,813,533. The recertification required a two-thirds vote of the committee and does not ask the towns for more money.

Stanton explained that the adjustment and “reclosing” was made to adjust more precisely for the end of the fiscal year, coming up at the end of June. He said he was now better able to judge where the district will be in June than he was several months ago.

“The budget is so fluid and we can not spend over the appropriated budget. Once I had it stabilized, I recommended to the SC that we use all E&D funds to ensure that we do not overspend the budget,” he said.

The transfer, if approved as expected by selectmen in each town, will exhaust the Department of Revenue certified E&D fund for this (2014) fiscal year. The law says that both towns must approve any increases to the budget, even if there are available funds in E&D. They have 45 days to approve from the date of the increase. If the towns have not approved after 45 days then it automatically is approved. A new E&D number will be certified sometime in the fall, after the district’s auditors, Melanson Heath & Company, complete the end of year audit and submit a balance sheet to the DOR (this is a standard End-of-Year auditing procedure and is not related to the special audit conducted earlier this year in response to the budget shortfall), Stanton said. Stanton expects this number to be between 100K-200K but stressed it is far too early to give an accurate projection.

In the interim, Stanton explained, E&D will be replenished over time with revenue that is over the projected budgeted revenue (such as Chapter 70 state aid and Chapter 71 transportation reimbursement), “with potential new revenue streams in Special Education that new Director of Pupil Personnel plans to implement (which may take a year or two to establish), and conservative spending.” E&D money will come from any income source that exceeds the projected amounts as specified in the voted budget as well as any monies not spent in the General Fund budget. It will take a few years to replenish E&D, Stanton notes, but the budget is now structured in ways that will both avoid the need for an override or using E&D as a revenue source.

The structure, regulation, and use of the E&D funds are complex. Stanton said, “There are a number of rules and regulations that the District must follow in order to use the funds, which are comparable to “free cash” in municipalities. The School Committee must vote to amend the previously approved budget with a 2/3 vote and then the two local appropriating authorities have at least 45 days to consider this amendment.” In this case, since the District is not asking for additional assessments, Stanton does not expect the two towns to need the full 45 days. This will allow him to work with a balanced budget for the first time this year.

For a number of years, the school district and school committee relied on E&D funds to serve as a backstop against increasing Groton’s and Dunstable’s assessments even as the base expenses of the District continued to rise. That was accomplished in large measure by applying temporary Federal stimulus money toward district expense increases rather than using it to sustain existing salaries and services at a time when the state’s Chapter 70 funding to the District was reduced due to plummeting tax revenues.

The reliance on E&D saved the towns from increased assessment but made it necessary to make the controversial catch-up payments this spring to bring the town’s contributions to the district into line with the actual cost of running a successful regional school district. The final chapter in that story was written May 12, when Dunstable Towon Meeting approved their assessment of $5,058,711, an increase of $498,956 from its FY14 assessment. Groton already approved its share of the shortfall when it approved an additional $1,403,187 at the April 28 Town Meeting.

Because revenues are increasing and accounting issues from fiscal years 2011 through 2013 are resolved, the School Committee and the district budget office have agreed that E&D will no longer be used as a budgeting tool and will serve its more common role as an emergency fund for unexpected expenses, Stanton said.