January 22, 2021

Rehoboth - Time to Save our Town

Posted by Lfaustino

** Attention Rehoboth **
To clarify, the Finance Committee(FC) has NOT recommended an override like some may have thought. The FC has presented a balanced budget, with the RECURRING revenue sources the town expects to receive in any given fiscal year and includes recommendations as voted and shown in the warrant.

The School Committee(SC) is requesting funds ABOVE this recommended budget by the FC. If the residents wish to fund this request by the SC, we as a town, must fund this increased budget somehow. The current options to fund their request would be:

  • Make cuts to the TOWN budget to compensate for the funds requested ABOVE the budget
  • Vote for an OVERRIDE to increase tax revenue permanently to cover the requested funds (as the school district will continue to need these extra funds going forward)
  • Utilize money from the Stabilization Fund. (This would eventually result in an OVERRIDE being NECESSARY when the stabilization fund is depleted, to create a continuous revenue stream to cover their expenses. The school district will continue to need this same increase PLUS any additional increase for each year moving forward.)

The current SC claim that they don’t want an override, but rather use the Stabilization Fund, is simply a SMOKE SCREEN to CONCEAL the intended result. In the end, an override will be the ONLY option!

Stabilization Fund is essentially a savings account. It does not have a source of revenue contributing to it. Money that is put into the Stabilization Fund must be voted on and approved for future savings and emergency Capital Expenditures. Its intent is not to be utilized to fund the operating budget. Once you use it, POOF it’s GONE like a depleted savings account! Fiscally responsible policy dictates that you do NOT use such Non-Recurring Revenue sources to fund a Continuous Expense Stream!

If we use the Stabilization Fund for the SC FY20 request, we will have to use Stabilization AGAIN in FY21 even if the school’s budget does not change -- it is built into the assessment now and MUST be funded going forward. Because the School District's budget continues to grow at a faster rate than the town's revenue growth, the town's FY21 budget would not only have to cover the shortfall THIS year but AGAIN…and AGAIN..!

This is what happened for our current FY19 and what pushed the override last time. In FY18, we had to use $920,000 of Free Cash in order to meet the needs of the School District's assessment request. Free Cash is a fund established for money that is left over at the end of the fiscal year either by unspent budget, unanticipated revenue from other sources, or windfall from the sale of a capital asset. It is a Non-Recurring revenue source; once it is spent it is gone.

Since the school budget is never reduced, we know that the FY19 assessment was going to be AT LEAST the FY18 appropriation which includes the $920,000 of Free Cash. The town revenue does not automatically provide that $920,000 for FY19 and the town no longer had it in Free Cash. It needs to come from somewhere, but where? In addition to the $920,000 shortfall in FY19, the school committee requested and ADDITIONAL $1.3M above and beyond. This is why the $2.1M override was needed. This same pattern is happening again this year, but rather than requesting another Override, the SC is suggesting the use of the town’s Stabilization Fund.

The request of the SC to fund an operating budget with a one-time revenue source such as a Stabilization Fund is fiscally irresponsible! This is like paying your household bills with your savings account because your income is not high enough. Eventually you’re going to deplete all the funds and be left with NOTHING!

** Eyes Wide Open Rehoboth **
This is exactly what will happen to OUR TOWN if we follow the request of the SC to utilize Stabilization Funds in this scenario!! The fiscally responsible course of action, based on where we are currently, would be to approve the recommended balanced budget by Rehoboth Financial Committee.

** Makes sense RIGHT?**
HOWEVER, Azar is suggesting we use the Stabilization Fund to cover funds requested above the recommended FC budget, because last year he PROMISED everyone the override was going to fix the problem and “Re-Set our Base” (remember that?). If you recall, this is exactly what many predicted would happen because, ONCE AGAIN, this is NOT a revenue issue, THIS IS A SPENDING ISSUE! Both another Override and using the Stabilization Fund is continued fiscal irresponsiblity for the future of Rehoboth!

BE PRESENT and vote Tuesday May28th:
NO to fund the requested SC Assessment and YES to the FC recommended budget.

#YourVoteCountsMay28 #SaveOurTown


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