Over the last several years I have been observing and commenting on the budgeting processes and spending as managed by the Woodstock Board of Finance. During that time I have uncovered, and made public, numerous irregularities that have at times raised serious questions about the budgetary process and validity of the resulting budgets.

As a result of my having raised questions concerning clerical and accounting errors in the implementation of Proposition 46, in May of this year the town treasurer, Mrs. Barbara Rich, in a letter to the chairman of the Board of Finance, Mr. David Hosmer, requested that board form a subcommittee to work together with the Town Attorney and Auditor to develop a policy "based on our historical application of the terms" to address the "interpretation and implementation of Proposition 46". At the July meeting the board of finance did form the requested subcommittee.

I wholeheartedly support the effort to clearly state, in a policy, the procedures for interpreting and implementing Prop 46; however, there are some issues – particularly with the "based on historical application" part – as any such policy must be compliant with State statutes and Town ordinances. Hopefully inclusion of the town attorney and town auditor will help assure this compliance. To be more specific on the issues themselves:

One of the more serious issues I have raised concerns what are clearly clerical errors caused by the failure to properly update the Prop 46 Worksheet to reflect changes that were made during the budgeting process to the education budget – specifically having to do with transportation and special education accounts which have been defined as "State Mandated" expenses exempted from the Prop 46 cap. The documentation is clear and may be seen at the Woodstocktruth.com website (Documents -HERE-). The numbers simply do not match – by several hundred thousand dollars! These errors occurred during the 2004 and 2005 budgeting years, and because Prop 46 was used to set the budget in subsequent years coupled with the accounting procedures that were used, have continued to impact EVERY budget since then. A policy is not going to change the fact of these errors, unless, of course, it states that mistakes don’t count. When this information was presented to the town attorney, and then brought up in a subsequent telephone conversation, his response was, "THEY ARE MY CLIENTS AND I CAN’T TALK ABOUT THAT". I thought the town was his client, but….

On issues that are more policy and procedures oriented there are four expense areas that are exempted from the Prop 46 cap and are allowed "as necessary to cover" – emergency expenses, legal judgments, state mandated programs, and debt service. Each has presented specific problems and issues.

An emergency expense is supposed to address a "one time" unforeseen circumstance that requires "immediate action" and when presented to the town for approval have been approved as such; however, contrary to legal opinions from the current town attorney and previous town attorneys, because of the accounting procedures used in determining the spending limit under Prop 46 these expenses have been "rolled over" from one year to the next becoming virtual perpetual annuities paid by the taxpayer. Correcting this is fairly simple. Not correcting it raises not only legal issues but may cause problems getting approvals in the future – not something in the best interest of the town or the taxpayers.

Debt service costs are also exempt from the Prop 46 cap. These result from town borrowing and in particular from bonding issues. The "historical" procedure has been to use reductions in debt service – resulting from having paid down the debt – as a general revenue stream. In other words, as we pay the debt we keep making the payments and they are used as income. A neat trick if you can do it but might just cause some to question ANY bonding in the future as it seems to turn into another form of permanent tax increase – again, fairly easy to correct and not in anyone’s best interest not to.

The last issue I want to address is State Mandated Programs. Setting aside the issue of what really is state mandated (required) and what is not, State Mandated expenses are also exempt from the Prop 46 cap under the "necessary to cover" clause. There are two types of expenses: one time, and recurring. What has been the practice with these state mandated programs is that any expense that has been "necessary to cover" goes into the calculation of the limit and then the accounting procedure allows it to be rolled over year after year. For one-time expenses the effect is obvious, like the case of "emergency expenses" it continues to be charged to the taxpayer even after it is no longer required – another perpetual annuity. In the case of recurring expenses – like transportation expense for education and for special education – the effect is more subtle but even more costly. "Historical" procedure has been to only count increases and not take into account decreases in individual programs – transportation and SPED are treated as two separate accounting line items. So what? Well, any one line item that increases also increases the spending limit for that year if it then goes down the next year the decrease is not counted, when it goes back up again – even to the same level it was previously – the increase is again counted and again increases the spending limit. It works just like a pump going up and down but always pushing spending in only one direction. Since each program/line item is treated separately, only the one increasing is counted – multiple line items act as multiple pumps. This too is easy to correct but will only happen if taxpayers take notice and speak up.

One more little issue with State Mandated programs for transportation and Special education – a certain percentage of transportation expense and any special education cases where the expense exceeds 4.5 times the previous year’s Net Current Expenditure per Pupil (NCEP), are expensed through the education budget and then reimbursed to the town. What this means is that any increases in cost in these areas is included in the Prop 46 worksheet raising the spending limit and then comes back – and is counted – as an increase in state grant money raising revenue and again increasing the spending limit – one more thing for the subcommittee to address in their policy.

Dave Richardson
Woodstock