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periodically been given the opportunity to determine whether to fund services with an operating override. Obviously, the timing of override issues matters; the town would not ordinarily choose to pursue an override during periods of severe financial stress—an important rationale for establishing a stabilization fund or reserve, and for using it in a timely fashion.) Rebuilding reserves. We support a policy to rebuild the town’s financial reserve funds in a timely fashion to the level of 7% of general fund revenues, as recommended by the 2006 Financial Policy Review Committee. Replenishing reserves will be a protracted, difficult challenge, because: •the reserves we accumulated earlier in this decade did not reach the above- mentioned benchmark of 7% of general fund revenues, given the untimely advent of the credit crisis and recession; •the reserve accumulation was made easier by several significant, one-time financial events (“windfalls,” if you will; note that the escrowed taxes on poles and wires, discussed above, represents a possible future example of such a windfall); and •with the growth in the town’s budget, it will be desirable to build reserves to a significant level before the next downturn, i.e. to a level probably on the order of $10 million or more. The present circumstances underscore the evident wisdom of the town’s commitment over the past several years to building a substantial stabilization fund, which will help Lexington weather the effects of the current economic downturn, while surrounding communities, and others throughout the Commonwealth, are slashing services and laying off experienced, valued members of their workforces. We hope our fellow townspeople will recognize the value of this important accomplishment, and will embrace an ongoing policy of establishing, drawing down, and renewing reserve funds—even though implementing it implies a multiyear period of discipline, sacrifice, and restraint. This policy may necessitate appropriating money into the stabilization fund even in years when other operating expenses are contingent on a Proposition 2 ½ override. Service restructuring and innovation. This report has made much of the imperative of finding a better, more cost-effective way to provide employees with health benefits. By the same token, we want to encourage the restructuring of programs to enhance efficiency, realize cost-savings, and improve service to the public. As noted, recent examples of successful program innovations that meet demanding cost criteria include investments in in- house special-education programs and in building energy conservation. The thresholds for such investments must be rigorous, but the town is ill-served if we leave no room for continuous improvement through application of information technology, adoption of best practices, consolidation or regionalization of service delivery, etc. Preservation of services. Our premise is that we want to avoid reducing services through prudent use of the various strategies discussed above. Lexington public policy has long been driven by a commitment to give residents a voice in determining whether services are to be maintained or reduced, when financial circumstances dictate, through the Proposition 2 ½ override mechanism. We endorse continuation of this approach. 17