October 16, 2013LITTLETON — With about $950,000 set to be added to the school budget, the use of district capital reserve funds to offset some of the tax increase is being studied. Taking that step may pose some challenges, however.
As the board discussed at its last meeting, charters outline how the funds can be used. Those purpose statements do not list use of fund dollars to offset a tax rate increase.
Last week, resident Brien Ward requested that the board consider reserve fund usage as a creative way to lessen the impact of the looming tax increase. He hoped the board would take $200,000 to $300,000 from the reserve funds to decrease the $950,000 that will soon affect the town's tax rate.
Such a large increase, Ward informed the board, was "rather heavy for the taxpayers to absorb."
The estimated increase could amount to a rise in the tax rate of about 90 cents. Ward requested that the board "take the taxpayers' interest into account" and "do more to see if you can lower that tax increase."
Members did not reject Ward's idea out of hand. A consensus among members developed to study Ward's suggestion.
The district currently has about $625,000 in five reserve funds. The funds cover special education, equipment, facilities maintenance, heating fuel, and the Gallen Career and Technical Center (CTC).
The purpose of the reserve funds can be found through a study the warrant articles that created the funds. The equipment reserve fund was created with Article Five in the 1984 district warrant. Language from that article states that the fund was "for replacing outdated equipment in future years."
The 1993 warrant brought the creation of the facilities maintenance fund. These dollars were "for the purpose of repairing and maintaining the school facilities."
A current board committee has been studying the district's building and facilities needs. Various recommendations are under consideration. As Superintendent Keith Pfeifer said last week regarding facility improvements, "There's a lot to be done, especially at Lakeway."
A total of just over $110,000 was available in the equipment and facilities funds as of September 18, according to district data. The new Lakeway playground, an authorized expenditure of $41,000, was taken out of the equipment fund earlier this year. Maintenance fund dollars were allocated for this summer's roof repair at Lakeway, which will cost about $85,000.
The heating fuel fund was part of the 2009 town warrant. The fund, with about $40,000 currently, is "for the purpose of maintaining adequate reserves due to the volatility in the commodities markets."
The funds with the most dollars in them are for special education and the CTC. The CTC fund holds about $320,000, more than half of the total dollars in the five combined reserve funds.
The district has $141,015 in what is formally known as the Educationally Disabled Children Reserve Fund. The fund was authorized in 1997.
Special education expenses can be very high, and a placement in the district may occur without much lead time. Additionally, as Pfeifer said last week, a single special education placement could cost as much as the entire $141,000 now in the fund.
The CTC fund was earmarked for repair, maintenance, expansion, and new equipment. Pfeifer noted that surrounding districts sending students to the Gallen CTC pay into the fund. Some of the fund's balance, therefore, is actually tax dollars from other communities, Pfeifer said.
Regarding the tax rate increase, Pfeifer said board members "certainly understand the impact of all this." As agents to spend the reserve funds, the board is able to draw dollars from the funds without further voter approval. Discussion about options for the board is anticipated at their next meeting, which occurs this Monday at 5:30 p.m.