Boards Tackle Projected $1.5 Million Budget Deficit For Coming Fiscal Year

By: Mary Stanley
Published: 12/10/10

Selectmen met last night with members of the finance committee and school board to begin grappling with how to shore up a $1.5 million deficit in the 2012 budget.

In the end, a compromise offered by selectmen James W. Pierce brought the deficit down to $300,000 with no anticipated layoffs for town employees.

Town Manager George H. Dunham will build a budget for the coming fiscal year that reflects a $427,155 increase over this year's budget to cover salary increases for town employees. Meanwhile, the school department will receive approximately $240,000 less in local aid in the coming year.

Initially, the three boards were looking at a draft budget that called for an overall three percent increase for both the municipal and school department, with the school department receiving $24 million in local aid. But the bottom line of that draft budget showed a $1.5 million deficit. The deficit would have to be shared by the municipal and school departments, with the municipal government cutting its budget by $500,000 and the school department cutting $1 million from its budget.

Mr. Dunham told the board of selectmen that if he had to cut $500,000 from his budget, it would mean reducing his staff by 14 employees.

Superintendent of Schools Mary Ellen Johnson told the board of selectmen that a $1 million reduction in local aid would be added to other reductions in aid she is anticipating as well as increases in expenses and that could require her to cut as much as $2 million from her budget. She said she is anticipating a five percent decrease in Chapter 70 state school aid next year. She is also preparing for a $200,000 increase in transportation costs as well as a $300,000 increase in special education costs. She pointed out that contract negotiations are still ongoing.

To shore up some of this shortfall, she plans to cut $500,000 from her utility account, $160,000 from professional development, and cut eight jobs.

However, she said, the school department is slated to receive $400,000 from a Federal jobs grant and $220,000 from the school choice program, which refers to students who live in another school district but attend Sandwich Public Schools.

Mr. Pierce suggested that $23.2 million be allocated to the school department, which reflects about a $240,000 reduction from what the district received this year.

He suggested increasing the general government's operating budget by three percent but urged Mr. Dunham to try harder to estimate expenses, especially health insurance, closer to actual costs, to help save money.
Mr. Dunham explained to Mr. Pierce that he keeps a cushion in that account in case there is an increase in the number of employees who opt to purchase their health insurance through the town.

Initially, some selectmen and even finance committee members were not comfortable with reducing the health insurance line item.

"The cushion in the health insurance only represents 14 or 15 families that could come on to the town's health insurance," said Chairman of the Finance Committee Glenn S. Pare.

"We've had discussions in the past [about shaving] some of these forecasts closer to the actual costs. I would be more comfortable with doing that if we had more than $800,000 in the stabilization account," said Chairman of the Board of Selectmen Dana P. Barrette.

Mr. Pierce did not back down from his suggestion to budget this expense closer to the actual costs.
"My worry is that we will over-forecast this line item and end up laying off somebody we didn't need to lay off," he said.

Mr. Dunham offered a word of caution about cutting health insurance estimates closer to actual expenses.
"We have to plan for worse than what is going to happen," Mr. Dunham said.

Mr. Pare pointed out that, in the past, any surplus money in this account has ended up as certified free cash, which is money that was available the following year.

"If we take money out of health insurance, that takes away from certified free cash. If we didn't have $1.3 million in certified free cash this year, our deficit would be $3 million this year," he said.

But Mr. Pierce did not back down.

"I don't want to be positioning ourselves to cut services so that we can put money in the bank," he said.
In the end, selectmen voted unanimously to allocate $23.2 million to the school department, $14.7 million to the general government's operating budget and to direct Mr. Dunham to come up with savings by estimating expenses closer to actual costs.