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February 6, 2008 Minutes Town of Lexington Appropriation Committee February 6, 2008 Place and time: Town Office Building, Room G-15, 7:30 PM Members present: Alan Levine (Chair), John Bartenstein (Secretary), Deborah Brown, Richard Eurich, Pam Hoffman, Michael Kennealy, Susan McLeish, Eric Michelson, Rob Addelson (ex officio, non-voting) Also present: Tom Diaz and Tom Griffiths of the School Committee; Mary Ellen Dunn, Assistant Superintendent for Finance and Business; Michael Young, Budget Officer. The meeting was called to order at 7:40 PM. Discussion of FY2009 Budget. 1 The Committee continued its discussion, begun at its January 31, 2008 meeting, of measures that have been proposed by the School Department to close the FY2009 budget gap and, in particular, the pro’s and con’s of using various sources of arguably non-recurring revenues to help bridge that gap. Messrs. Diaz and Griffiths and Ms. Dunn led the Committee through the memorandum from Mary Ellen Dunn, Assistant Superintendent for Finance and Business, dated January 31, 2008 and detailing specific proposed adjustments to the budget that would close the gap that existed as of Budget Summit III, and answered numerous questions. The Committee further discussed the pro’s and con’s of the pending proposal to use $350,000 in Free Cash, which had previously been proposed to begin the funding of a Special Education (SPED) reserve, to help bridge the gap in the school operating budget. Tom Diaz confirmed that the School Committee will definitely take steps at the 2008 Annual Town Meeting to re-appropriate $350,000 of an anticipated FY2008 school budget surplus to some form of reserve for potential out-of-district SPED tuition and transportation costs, effectively “pre-funding” the originally planned reserve contribution. The form of the reserve has not definitively been established, but Tom expressed a strong preference for a dedicated, separate stabilization fund targeted for this purpose. Assurances have been given that such a reserve could be established at the Annual Town Meeting within the scope of the existing warrant. The School Department estimates that it will end FY2008 with a budget surplus ranging between $0.5 million and $1.7 million, but a better estimate will not be available until later in the spring. The school representatives feel comfortable re-appropriating $350,000 to a SPED reserve, as described above, but will not be in a position before the commencement of the annual town meeting to commit to a higher amount, even though they believe the actual surplus will be significantly higher, in view of the risks of late- breaking new SPED costs or other extraordinary, unforeseen obligations. Any year-end surplus in excess of this amount would ultimately flow to Free Cash and would then be available to help offset a potential budget gap for FY2010. Tom Diaz agreed that any FY2008 surpluses over $350,000 should be protected and set aside for such use. - 1 -