District deficit transfer vote set
NASHUA – By late Thursday, the city might be halfway home in settling what to do about recent overspending in the school department budget.
What to do about the other half of the problem remains a work in progress.
The aldermen’s budget review committee will meet today to consider a resolution to transfer $3.3 million from the school capital reserve account. The money would cover a shortfall in the school department budget for fiscal 2009, which ended June 30.
A special board of aldermen’s meeting is scheduled for Thursday night for the board to act on the resolution.
Both meetings are scheduled for 7 p.m. in the aldermanic chamber, on the second floor of City Hall.
If the resolution is approved, that allows the city to close the books on fiscal 2009. However, the Board of Education is still working on the second part of the shortfall issue – covering a projected $3 million deficit for fiscal 2010.
School officials attributed both shortfalls to miscalculations that resulted in overspending in accounts for salaries, pensions and special education.
Under the resolution before the Board of Aldermen, the $3.3 million would cover a share of the school debt principal payment that the city budget already paid for. The city would then transfer $3.3 million of city dollars to the school district operating budget to allow for the deficit to be covered.
Officials don’t want to take $3.3 million from school capital reserve and move it directly into the school-operating budget, bypassing the second step, because they worry that action might hurt the city’s bond rating.
The bond rating is much like an individual’s credit score, in that it impacts how good a percentage rate the city gets for borrowing money.
Currently, the school capital reserve fund totals $7.8 million, including $2.2 million for a school security system that the mayor vetoed after the shortfall was discovered. The Board of Aldermen failed to override the veto last week.
The capital reserve account is used to save for improvements to buildings such as heating and air conditioning systems and roof repairs.
Tapping the account may be effective, but it’s not a perfect solution, both city and school officials have said.
“Of course, in a prefect world, you wouldn’t have to do it at all,” said Alderman-at-Large Steve Bolton, the board’s president.
The resolution solves the immediate problem of covering the overexpenditure without making it necessary to enact a provision of the city charter, Bolton said.
Such a provision would require a two-thirds vote to override the spending cap, and several members of the board of aldermen have said publicly they would not do that under any circumstance.
Bolton said he believes his colleagues will recognize the transfer as an effective solution, considering the reality of the situation.