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Century-old trust fund will help cover school deficit


SHIRLEY — A transfer of over $64,000 to the reserve fund, informally earmarked for the school district by the Finance Committee, will help fund shortfalls in this fiscal year budget.

However, the deficit may not reach the projected $220,000, said district business manager Evan Katz.

The School Committee worked with town administrator Kyle Keady and town counsel to determine that a trust fund established over 100 years ago for the schools can be transferred to pay a majority of the deficit. Only after that fund is drained — set aside the principal — will the district turn to the Finance Committee to release any additional money from the town’s reserve fund.

“I think it affirms that we made a good decision with the town to use the reserve fund as a place to go,” said Katz.

“I do feel good about the Town Meeting (April 7),” said interim Superintendent of Schools Malcolm “Mac” Reid. “I think for the first time in a long time the School Committee and the selectmen worked together.”

Other town boards also cooperated to find a solution, including the Finance Committee, he noted.

“I think we came out of the meeting in a good place,” committee Chairman Robert Schuler agreed.

This year’s shortfalls included unexpected special-education expenses and rising heating costs, Katz explained several times in the weeks preceding the Special Town Meeting.

School Committee member Paul Wilson asked Katz at the committee’s April 9 meeting whether the school budget could include any type of stabilization fund to defray future deficits should they occur.

State law doesn’t allow a reserve or stabilization fund, answered Katz.

“There are ways, given the flexibility we have, to set money aside,” said Katz. “Lots of school districts are strategic like that.”

A few revolving account balances, such as circuit-breaker money provided by the state to reimburse the district for special-education expenses and school-choice revenue, can be carried over to the next fiscal year, said Reid.

Given the possibility that the district will need to take money from the $64,000 transferred to the reserve fund, he said he hopes any carryover won’t be held against the district.

There are also several grants that will hold balances, as the funds are designated to certain activities and materials, said Reid. A positive balance doesn’t indicate that the money can be spent anywhere, he explained.

If the district needs to use money from the town’s reserve fund this year, he said he hopes that carrying any balances over to the fiscal year 2009 budget won’t be held against the district by the town.

The committee should initiate discussions with the selectmen to gauge how they feel about any financial holdover, said Schuler.

If the district doesn’t use the full $64,000 this year, Schuler said the Finance Committee will consider holding a portion of the money should unexpected budget constraints arise.

“The only alternative is to go back to the town and do what we just did,” said Schuler. The committee should initiate discussions with the selectmen to gauge how they feel about any financial holdover, he added.

The committee discussed what amount, if any, would be appropriate to carry over for extraneous expenses.

A half a percent of the total budget may be reasonable, suggested committee member Jennifer Sedor.

“That’s a good margin of error,” she said.

“I think that’s responsible, if not on the low side,” said committee member Donald Parker.

Sedor revised her suggestion to 1 percent following input from other members.

“You build a budget almost a year before this whole budget begins to occur,” said Parker. “You have to have some contingency because of some (expenses) you just aren’t aware of.”

However, Katz said he doesn’t think the district will see the cost swings it did this year in fiscal year 2009.

“I think I’ve got a very good sense of the budget and what needs to be funded,” he assured committee members.

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