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Town Ends Fiscal Year in the Black, Finance Seeks Reserve Fund Policy

Southington will finish the fiscal year with approximately $300,000 that will be placed into the reserve fund, but members aren’t satisfied with the process and want changes in how reserves are budgeted.

After accounting for final transfers and appropriations of expenses and revenue, Southington is set to finish the 2011-12 fiscal year with a surplus of roughly $300,000.

The surplus isn’t enough to satisfy members of the Board of Finance, however, as they expressed concerns that the money being transferred into the town’s reserve fund was slightly less than desired and the lack of a policy or line item has left the amount to be designated to the reserves each year up to chance.

“In the two, almost three years that I’ve been doing this, in order to maintain our designated reserves, we always have had to cross our fingers and hope and pray for surplus,” said Chairman John Leary. “It’s that surplus allow us to remain where we are at, but we need to do more to engineer the process so we know we will have the ratio we want.”

The town currently operates with a designated reserve, or rainy day fund, that sits at just over $12 million.

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The fund has largely been built in recent years using surpluses from the town’s annual budget, but none of these surpluses were specifically budgeted for the rainy day fund, Leary said.

With finance members approving a zero-base budget for the first time as part of the 2012-13 budget, board member Wayne Stanforth said now is the time to move in creating a policy.

Stanforth and Leary each said they’d like to see a special line item in the annual designated to reserves. This line item would specifically be used to bolster the town’s rainy day fund and help strengthen the town’s reserve policies at the same time.

Garry Brumback said he would be in favor in the change to a full policy, rather than using the surplus.

“Right off the bat, we are (currently) challenged on the town side to make sure we didn’t use that contingency,” Brumback said. “That in essence is hanging over us the entire year, to make sure we don’t use all that has been budgeted.”

If the town is going to do this, however, finance members said Wednesday that they would like to see the Board of Education be involved in the process and provide a line item in their annual budget as well. Brumback said he would sit with School Superintendent Joseph V. Erardi Jr. and his staff to discuss the possibility.

“I believe this should be a partnership and if the Board of Education is going to be 65 percent of the budget, they should be budgeting 65 percent of the line item for the reserve,” Leary said.

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marty g July 26, 2012 at 10:11 AM
Thanks, Jason, for a good laugh this morning to help me to start my boring day! That they are so concerned about restricting and conserving the surplus for contingencies when last week or so they were thinking of using it for a kids playing field that's hardly a contingency need, well, that's just pure comedy -- pure, unadulterated comedy! I can't stop laughing. [Who said local government is dull?] Thanks guys down at the Town Hall. When you go on the road with your act please post it on the Internet and I'll be a groupie -- I just love a good laugh.
John Leary July 26, 2012 at 10:57 AM
Marty G. - Southington has not used its "Rainy Day Fund" for artificial turf or anything else. I believe as most, if not all, BOF members do, that the "Rainy Day Fund" is to be used for emergencies and one time opportunities. The issue is that there is a ratio of reserves to income that is monitored by the BOF and the credit rating agencies. Each year as our income increases we need to build up this reserve to preserve the ratio. So for every $1 million of new spending we need to add roughly $100K of reserves to maintain a 10% ratio of reserves to income. We do not have a line item in the budget that allows us to budget the required increase to the reserves. Instead we curtail spending in the town departments so we can have a surplus and use the surplus to build the reserve. So in essence we authorize departments to spend X and then tell them they can only spend Y because we need the money back to cover required increases in the "Rainy Day Fund". The additional complication comes when the Board of Education spends essentially 100% of their budget forcing all increases to the "Rainy Day Fund" to come from the general government side which represents only 36% of the spend.
John Leary July 26, 2012 at 11:05 AM
If readers would like more information I, along with the other BOF members, would be happy to spend more time explaining and discussing the budget, the budget contingency, the rainy day fund, turf funding proposal, or any other item of interest. Please call us or email us. Our contact information is on the Town of Southington web site. John Leary - Chairman - Southington Board of Finance
Fred K July 27, 2012 at 10:32 AM
Well by that logic, then, the taking (or pilaging) of the rainy day fund should not go to the playing field project whatsoever! The high school playing fields are part of the educational system and, by your own admission, they routinely abscond with more than their share of taxpayer money.. So, if anything, you pirates ought to be putting any released funds back into the general government for things like fixing roads, improving public safety instead of cutting out fire protection, buying more buses for seniors, maintaining public buildings so we don't need new after 20 years; unimportant stuff like that. Instead, you're going to give the Board of Ed (and the sports empire in Town) another 300 grand! Contingency funds, rainy day funds are just for that -- emergencies. "Oh, crap, that storm knocked out our downtown sewer systems and we had no budgeted line item. Goooood thing we've got a rainy day reserve." If you clowns are telling us that you went ahead and pushed for this playing field that now needs "emergency" money to come off, you ought to be indicted for fraud! Marty, sorry to say, I can't laugh at this nonsense.
John Leary July 27, 2012 at 10:59 AM
Once again the rainy day fund "Undesignated reserve fund balance" was not used for artificial turf or anything else. The Board of Finance did not push for artificial turf. The BOF was asked for a recommendation on how to fund artificial turf and we did our best to fund it in a manner that avoided $25K or bond initiation fees and over $150K of bond interest. Again we did not use the "rainy day fund". Regarding the Fire Department the 11/12 budget was $3,790K and the 12/13 budget is $3,904K that is an increase. There is no pending item to provide the BOE any additional money. The BOE is given one amount per year in their budget. For 11/12 it the BOE was budgeted at $79.7 Million and for 12/13 it is $82.7 Million. I understand that hearsay builds perceptions that lead to frustrations. I urge all citizens to contact any member of the BOF for further explanations.

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