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The FPRC would certainly review and assess fiscal policies recommended by the <br />Appropriation and Capital Expenditures Committees and implemented by the Board of <br />Selectmen. The task force anticipates lively dialogue between the FPRC and these <br />entities, but does not see any conflict in the charge to the FPRC and the statutory <br />responsibilities of the financial committees. <br /> <br />The following are examples of financial policies that the FPRC would consider: <br />A. Reserve Policies <br />Budget Reserves <br /> <br />As a % or an amount of prior year revenue? <br />As a % or an amount from property tax revenues? <br />As a % or an amount of Free Cash? <br />Stabilization Fund <br /> <br />What % of prior year revenue? <br />When can it be used? <br />How much can be withdrawn in any fiscal year? <br />How is it replenished? <br />Liability/Catastrophe Fund <br /> <br />Needed? If so, how to determine appropriate funding level? <br />Overlay Reserve <br /> <br />What procedures govern the use of this reserve? <br />B. Free Cash Policies <br />What are limitations on use of Free Cash? <br /> <br />What is Free Cash policy for funding reserves? <br /> <br />What is Free Cash policy for capital projects? <br /> <br />C. Capital Improvement Projects Policies <br />What defines a Capital Improvement Project? <br /> <br />What projects should be included in the capital budget? <br /> <br />How far into the future should the capital budget reach? <br /> <br />How is the capital budget evaluated? How are priorities established? <br /> <br />What are the financing policies? <br /> <br />D. Debt Management Policies <br />What are debt management policies? <br /> <br />What priority should be placed on retaining a Moody’s Aaa rating? <br /> <br />Under what circumstances should the town issue bond anticipation notes? <br /> <br />What should be the Town’s ratio of debt to town assessed values? <br /> <br />What is an appropriate level of annual tax levy debt service to the total tax levy? <br /> <br /> <br />In answering these questions, the FPRC should focus on statutory requirements, the <br />specifics of Lexington’s financial circumstances, and on policies and practices in other <br />well-managed communities (e.g., Brookline). <br /> <br /> <br />