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APPROPRIATION COMMITTEE 2 " REPORT, April 21, 2007, TO 2007 ATM
<br />The total of the Free Cash and Stabilization Fund balances grew substantially over the past year, in part as
<br />a result of actions taken at the 2006 Annual Town Meeting. The balances going into this Town Meeting
<br />are given in Table 1. We also note that, for FY2007, no transfers have yet been made from the Reserve
<br />Fund, the balance of which remains at $400,000. However, we expect that, with the approval of this
<br />Committee, most or all of that balance will be transferred prior to June 30 to municipal and/or school line
<br />items to help cover FY2007 budget overruns.
<br />Table 1: Free Cash and Stabilization Fund Balances
<br />As of:
<br />March 1, 2006
<br />March 1, 2007
<br />Free Cash
<br />$4,447,520
<br />$3,802,347
<br />Stabilization Fund
<br />$1,592,731
<br />$4,393,000*
<br />Total
<br />$6,040,251
<br />$8,195,000*
<br />*With an approximate amount included for accrued interest
<br />Of the $3,802,347 in Free Cash that is available, the Town Manager has recommended the use of $50,531
<br />to fund FY2006 unpaid bills, $209,469 to supplement FY2007 operating expenses, $1,887,347 for
<br />FY2008 operating expenses, and $655,000 for FY2008 capital projects. He has recommended that the
<br />balance of $1,000,000 be transferred under Article 40 to the Stabilization Fund. The latter transfer has no
<br />material effect upon the Town's fiscal condition because, from a reserves - balance perspective, the
<br />differences between Free Cash and a stabilization fund are not major. Two of the procedural differences
<br />are: (1) Free Cash is not available during the annual certification process from July I until the Town is
<br />notified by the State of the certified value, whereas a stabilization fund provides a continuously available
<br />reserve with a definite value; and (2) the appropriation of funds from Free Cash requires a simple
<br />majority vote, whereas that from a stabilization fund requires a two - thirds majority.
<br />The proposed changes to Free Cash are summarized in Table 2 and the proposed changes to the
<br />Stabilization Fund are surmnarized in Table 3.
<br />Table 2: Proposed Free Cash Changes -2007 Annual Town Meeting
<br />Certified Free Cash, July 1, 2006
<br />$3,802,347
<br />Less 2006 Special Town Meeting appropriation
<br />0
<br />Free Cash as of March 30, 2007
<br />$3,802,347
<br />Less use for FY2006 unpaid bills (Article 41)
<br />($50,531)
<br />Less possible FY2007 supplement (Article 42)
<br />($209,469)
<br />Remaining balance for FY 2008 articles
<br />$3,542,347
<br />Less use for operating budget (Article 21)
<br />($1,887,347)
<br />Less use for capital articles
<br />$655,000
<br />Less transfer to Stabilization Fund (Article 40)
<br />($1,000,000)
<br />Remaining Balance at End of Town Meeting
<br />$0
<br />Table 3: Proposed Stabilization Fund Changes"
<br />Balance July 1, 2006
<br />$4,265,947
<br />Estimated interest received in 2007**
<br />$175,000
<br />Transfer in Article 40
<br />$1,000,000
<br />Projected Balance July 1, 2007 (rounded)
<br />$5,441,000
<br />*The amounts in the special purpose Stabilization Funds to be created at the 2007
<br />Annual Town Meeting are not included.
<br />*Assumes an interest rate of about 4% for March through June 2007
<br />The Town Manager conservatively estimates that Free Cash will be approximately $2M on July 1, 2007
<br />(although determination of the actual value must await certification by the State Department of Revenue).
<br />The total of Free Cash and the balance in the Stabilization Fund is then projected to be approximately
<br />$7.4M on July 1, 2007.
<br />Page 6 of 24
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