Officials: Towns Control ORR Stabilization Fund

            As Heather Burke, acting chairperson for the Old Rochester Regional School Committee, summarized four significant changes proposed by the school district to the agreement with the tri-towns, Marion’s Finance Committee only had eyes for the fourth of those changes.

            Meeting in an August 25 joint session with the town’s Select Board and tri-town invitees to review and discuss the proposed agreement, ORR’s proposal of a capital stabilization fund dominated the discussion as stakeholders prepare for fall town meetings.

            “Currently, we don’t have a clean way to fund capital improvements and maintenance that are smaller in scale. This is designed to set up a fund so that we can plan financially for those upcoming maintenance issues,” explained Burke. “If there are more substantial needs, the School Committee will probably choose to use the debt-exclusion process because we can’t come forth with a budget that has such a huge increase that a capital item might cause.”

            The focus on the stabilization fund proposal took flight when Marion FinCom member John Menzel asked how ORR distinguishes between a small capital item and a maintenance project. Qualifying her answer as a business person as opposed to a facilities person, Burke said, “All of these come down to budget.”

            Burke said that every year Sippican School replaces a certain percentage of floor tiles. “You could call that a small, capital project or a maintenance project, but we haven’t been able to do it at the regional schools because we don’t have a budget for that purpose,” said Burke. “We have the same needs, but we don’t have the ability to fund it separately so we need this mechanism to be able to plan and budget for it within our budget.”

            ORR Superintendent of Schools Mike Nelson added that ORR’s budget subcommittee has to make decisions based on “what funds are out there.”

            Marion FinCom member Shea Assad suggested ORR consider non-recurring events as capital expenditures. “It’s probably good to establish, ‘This is what we mean by maintenance and this is what we mean by capital,” he said.

            ORR Assistant Superintendent of Finance and Operations Howie Barber threw another wrinkle into the discussion, introducing the life of an asset as well as its cost. Parking lots, for instance, have a lifespan and therefore are considered capital expenditures rather than maintenance.

            Menzel asked for the amount of the proposed Stabilization Fund and if it will be included as a line item in the ORR budget. It was explained that ORR would have to include the Stabilization Fund in the budget, and if the district wished to increase the fund it would have to amend the budget.

            Burke said there is a 5 percent cap relative to the annual operating budget.

            Marion Finance Director Judy Mooney made it clear she is in favor of the idea, but cautioned ORR as to the cold, hard reality of annual budget slashing. “Every year we have an issue with budget so every year it’s going to be a matter of, ‘Do we appropriate for the budget or … (the capital stabilization fund)?'”

            Marion Town Administrator Jay McGrail suggested that some years budgeting is driven by heavy needs for capital and other years by heavy needs for education. Nelson agreed.

            “I’m glad it’s in there, I don’t want to pin the budget to the capital,” said Mooney. “We have a tough time (with the budget) every year anyways so I just want to put that out there. That’s my only concern. I’m glad we have it.”

            After Barber verified an approximate total operating budget of $19,000,000 for the region, Marion FinCom Chairman Peter Winters pressed for more detailed explanation of the 5 percent cap relative to the annual operating budget. “How does it work? Is it something that is created every year or is it a fund that we have to keep topping off?” he asked.

            Burke was swift to note upon Barber’s hypothetical example of 5 percent of a $19,000,000 budget that approval is subject to town meeting vote and that the district’s intention is not to go anywhere near the maximum allowed.

            “If two towns vote for it, the other town is stuck with it, whereas if it’s a pure capital expenditure, it has to pass all three towns,” said Winters. “It’s changing the funding mechanism for capital improvements, at least for emergency capital funding.”

            Burke confirmed that Winters’ contention is correct where it affects the passing of the ORR school budget.

            Ultimately, Assad and Marion’s attending selectmen, John Waterman and Norm Hills, determined that the control still belongs to the towns because an ORR District capital stabilization fund would be part of the operating budget and remain subject to budget negotiations.

            “If it’s too big a number, then the overall growth of the budget’s going to be too high and we’re not going to be able to bond it. So it’s constrained by the overall growth of the budget and being a line item in the budget,” said Waterman, suggesting that the tri-towns make the effort to contribute to ORR’s stabilization fund, even in small amounts. “It’s much more likely to get crowded out by other line items. … It’s not like this is a windfall.”

            “That constraint mechanism is built in,” said Assad, concluding that ORR needs the stabilization fund for flexibility to address minor capital improvements and maintenance not covered in its maintenance budget.

            Only in theory due Marion selectmen think an ORR stabilization fund could creep up toward $1,000,000. “They’re going to have problems funding it,” said Hills, while McGrail added that, some years, ORR will need to spend the fund as soon as it comes in.

            David Arancio, representing the Rochester Finance Committee and Capital Planning Committee (chairman), sat in along with Rochester Town Administrator Suzanne Szyndlar. Arancio asked if this agreement can be compared to last year’s. Burke said the town finance directors would break that down, but Mooney said, “I don’t think you can point to the finance directors for that, we don’t make up the assessments.”

            Citing significant benefit in Rochester, Arancio suggested including a member of each town’s capital planning committee in school budget meetings. Burke said all school committee meetings are public. “Paul [Naiman] has been wonderful, reaching out to the other towns,” said Burke, citing the Marion CIPC’s chairman’s work on improving tri-town communication.

            Until the current process began in 2018, an overhaul of the ORR agreement had not been undertaken since 1986.

            Nelson said that the state Department of Elementary and Secondary Education gave the agreement its preliminary approval on April 8, and on April 14 Nelson relayed notification that DESE had preliminarily approved the agreement to tri-town officials with documentation including copies of the proposed clean copy, changes and a copy marking in blue the changes requested by DESE.

            The ORR School Committee unanimously approved the proposed agreement in the spring. Next steps, Nelson explained, would include getting the Capital Stabilization article on town meeting warrants. If approved at town meetings, then the agreement would go back to DESE for final review.

            The other three significant changes listed by Burke:

            1. School committee members’ three-year terms would run from July 1 to June 30 so they can be bookended by the academic year. Burke said legality questions have been settled.

            2. By the state’s mandate, ORR would comply with the “one-man, one-vote” law.

            3. A three-year rolling average to establish assessments to each of the tri-towns; this request came from financial officials from the three towns, according to Burke. “Because there can be a wild swing in the assessment based not only on the number of students that one town sends to the district but also an increase or reduction in the number of students that the other two towns send. There’s wild fluctuations in what that assessment can be, and it makes it very difficult to budget,” said Burke. “The towns felt it would be better to have a smoothing mechanism.”

            In answer to Assad, Burke explained that the apportionment process for capital expenditures is an average of five years, and operating expenses on a three-year program.

            The next joint meeting of the Marion Select Board and Finance Committee was not set at adjournment.

Marion Select Board/Finance Committee

By Mick Colageo

Leave A Comment...

*