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APPROPRIATION COMMITTEE REPORT TO STMI NOVEMBER 2006 The approved School budget included a reserve of about $260,000 to cover possible increased costs in the SPED program that were not known and could not reasonably be anticipated at the time the budget was prepared for the 2006 Annual Town Meeting. Unfortunately, this reserve was quickly outstripped by what have proven to be volatile, unpredictable, costs associated with the mandates imposed by State and Federal laws, but not adequately funded by either the State or Federal governments. The school administration is currently projecting after having applied that reserve —a total FY2007 SPED deficit of $1,035,737 ($115,203 for SPED instructional assistants; $788,778 for out -of- district tuition; and $131,756 for SPED transportation). (That projection does not include any further changes in SPED placements between now and the end of this school year.) Pursuant to its March 29, 2006, understanding with the Board of Selectmen and the Appropriation Committee, the School Committee has applied available surpluses in other school accounts (projected savings in energy and in some other items) to reduce the projected deficit in the FY2007 School budget to $915,219. On November 16, 2006, the School Committee also voted to apply a recent and unanticipated increase of approximately $91,000 in the METCO grant from the State to further reduce the deficit to approximately $824,219. This Committee fully concurs with these School Committee actions. Consistent with this Committee's recommendations, the resulting reduced deficit is being addressed now rather than at the 2007 Annual Town Meeting next spring and by appropriating the full amount from some of the additional revenues which have been realized since the 2006 Annual Town Meeting rather than from Free Cash, the Stabilization Fund or the Reserve Fund. (The net total of those additional revenues is $991,440 as summarized in the Introduction.) We feel it is critical that the School Department learn now if they will not have the additional funding so program adjustments can be made now instead of having the uncertainty stretch later into the school year with what would then have to be more severe adjustments made at the end of the school year. With additional revenues available, monies in the Stabilization Fund and in the Reserve Fund should be preserved for unforeseen contingencies that might occur later in FY2007. This Committee unanimously (9 -0) supports the request. Project Description Amount Requested Funding Source Committee Recommends Intrafund GF: Line 2130, (iii) Lexington Public Transfer of Group Schools Unemployment about Insurance, to Approve (9 -0) Compensation $52,800 Line 2140, Unemployment The Town currently estimates unemployment compensation spending will exceed the budget adopted at the 2006 Annual Town Meeting, which had included an estimate for the staff layoffs and reduction in positions if the June 2006 School override questions failed which they did. At the time of the writing of this report, the additional funding needed is $52,800, but it is anticipated that increase can be funded with a transfer of the same amount from a projected surplus in the health- insurance budget. This Committee unanimously (9-0) supports the requested transfer as well as any net amount, if needed. Page 6 of 15