Published: Jun 04, 2024 12:00 AM
In doing research for an insurance premium increase projected for 2025, new Finance Director Glenys Salas has identified a number of shortfalls in the budget that could lead to a $2.6 million deficit in town and school self-insurance line items.
“This is the worst case scenario,” Salas qualified the number, saying it could potentially be smaller, at the May 23 Board of Finance meeting.
The first part of the deficit comes from $1 million budgeted as revenue from the town’s fund balance that is not accounted for as an expense anywhere else in the budget.
“We will have a $1 million deficit as of June 30, 2024,” said Salas.
Salas said she believed that the deficit came from the budget being “somewhat optimistic” regarding unassigned fund balance revenues, which she said would be closer to $200,000 than $1 million.
On the revenue side, Salas said she found a shortfall of $500,000.
The school budget also included a grant of approximately $100,000 that had previously expired, which means a $100,000 shortfall there.
Finally, by looking at the claims to the town’s self-insurance for 2024, she is estimating that expenses will exceed the self-insurance line item by $1 million.
BOF member Barney Molloy noted that in future budgets, this could mean a “seven figure increase” in the insurance line item “no matter how you slice and dice it.”
However, the shortfall should not affect the town’s overall budget too negatively; she noted the town is “in a very strong cash position.”
“We’re not in danger of not being able to pay bills,” said Salas.
She also noted that attempts to put the budget back in line could be a “multi-year” effort.
Salas said the town could remedy that situation by appropriating the $1 million elsewhere in the budget; however, she said if taken from the fund balance that would put the town below the 12% of total budget target the town set for the fund balance, which is part of the town’s AAA credit rating with S&P Global.
She recommended that the town and school employees cost share for insurance increase to “be in line” with the town’s contribution, increasing to 9%.
The BOF, the Board of Selectmen, and Legislative Council are expected to continue discussion of possible remedies for the shortfall at future meetings.
Editor Jim Taylor can be reached at jim@thebee.com.
