GloucesterTimes.com, Gloucester, MA

January 19, 2013

Schools, DPW top free cash winners

By Richard Gaines
Staff Writer

---- — Responding to a request from the City Council, Mayor Carolyn Kirk has issued a comprehensive plan for distributing $1,721,762 from cash reserves for 21 distinct purposes, leaving the city reserves of more than 5 percent of the operating budget, as recommended by the state, she said Friday.

After the distribution, which requires council approval, the city would be left with $2,752,699 in its stabilization account and total reserves of $4,930,000.

“The comprehensive plan for free cash is straightforward,” Kirk wrote in a memo to the council. “It calls first and foremost for the protection and growth of the city’s reserve levels, and adherence to the fiscal policies set forth by the administration ... This approach forces choices to be made and not all requests can be honored.

”However,” she continued, “in this, as we are already starting to see, this approach leads to stability and sustainability of the services important to the citizens of Gloucester.”

The largest distribution, $529,518, would go to the School Department to fill fiscal 2013 budgetary gaps, primarily in special education.

The city held $4.8 million in free cash following the closing of the books on fiscal 2012, which ended June 30. It was the third consecutive year of free cash for Gloucester after nearly a decade of red ink at the bottom line of annual reconciliations.

“To show just how far we have come in the last five years,” Kirk wrote in a cover memo to the council, “note that as of July 1, 2008, Gloucester alone accounted for more than half of the total negative sum of free cash reported from the 351 municipalities. Today, we are generating appropriate amounts of free cash that demonstrate good fiscal management.”

The council has already approved the appropriation of $422,500 for Fire Department overtime and school heating.

Bond rating agencies and the state Department of Revenue recommend municipalities keep at least 5 percent of their operating budget in reserve in a combination of free cash and reserved fund balances. Last fall, Moody’s Investor Services reaffirmed Gloucester’s Aa3 bond rating, while noting a 24 percent increase in long term debt over the last year.

“Gloucester’s long-term Aa3 rating reflects the city’s moderately-sized coastal tax base with average socioeconomic indices, an improving financial position and an above average debt burden,” the Moody’s report indicated.

The distribution of the $4,930,000 in reserves involves the $2,752,699 in the stabilization fund, an level requiring the council to appropriate to free cash $616,075 from the free cash left over after the reconciliation of the 2012 books by the state Department of Revenue. In addition, from free cash would come through a council appropriation of $100,000 for a health/pension fund for municipal employees, and $500,000 for a capital project stabilization fund.

The remainder of the $4.930,000 in reserve would be made up of the unreserved fund balance.

The following uses of $1,721,762 were proposed for council approval:

Department of Public Works, $294,607, including for work on school facilities;

The Sawyer Free Library, $50,371 to bring the budget to the level that would assure certification by the state and access to the inter-library loan exchange system;

Council on Aging/Rose Baker Senior Center $47,550 for furnishing and equipment;

Committee for the Arts, $2,000 to support restoration of murals in City Hall;

$75,000 for reducing user athletic/user fees in school sports, a move that requires School Committee approval.

Public Health Department, $26,376 to close a gap and help provide for purchase of shingles vaccine;

Tourism Commission, $16,275;

City Council, $30,000 for equipment and furnishings;

Veterans Services, $40,000, to meet demands for benefits.

Assessors Department, $55,000 primarily for home inspections;

Legal Department, $53,424, primarily for part-time staff as well as unanticipated legal fees, settlements and claims;

City Clerk’s Office, $10,450, primarily for furnishing and equipment.

Community Development Department, $18,000, to fill a fiscal 2013 budgetary gap in administrative costs for departed employees;

Police Department, $125,641, primarily for contract obligations and promotions due to unanticipated personnel changes;

Fire Department, $132,000 for training a new hire and vehicle maintenance;

Personnel Department, $86,404, for unanticipated retirement/sick leave buybacks, incentives, health and insurance costs.

Richard Gaines can be reached at 978-283-7000, x3464, or at rgainesgloucestertimes.com