Williamstown Fin Com reminds us of $1.5 million endowment commitment

The following letter was sent to the school committee in May 2020 from the Williamstown Finance Committee. In this letter they remind the school committee of the commitment to retain $1.5 million of the Williams gift as an endowment.

They also remind the committee of The MSBA’s Maintenance and Capital Planning Best Practices statement recommends:

“Municipalities and districts that are serious about preserving their assets consistently set aside funds to keep up with the necessary and ongoing capital improvements. This can be effectuated by the creation and use of segregated local funds or a stabilization fund reserved for use on capital projects….”

You can find the letter here on MGRHS website: LETTER

__________________________________________________________________________

Dear Chair Conry,

It has become cliché of late to begin communications with some reference to “these troubled times” but I really do hope that you and others on the School Committee are healthy and not overly burdened by the current pandemic and its associated difficulties. In such circumstances, it is important for us all to be patient and thoughtful!

We on the Williamstown Finance Committee have begun the process of understanding and coming to terms with the changes in revenues and expenditures that were originally planned as part of the FY 2021 budget and that were about to be finalized in preparation for Town Meeting when everything was upset by the pandemic. We know that the Towns and School District have been scrambling to assemble information about funding sources, changes in function and expenses, and the combined implications for proposed budgets.

Mindful of the fact that budgets will have to be finalized at some point, and that we as a Committee will have to make a recommendation to the Town Meeting about whether or not to approve Warrants for budgeted expenditures including the Town’s contribution to the School District, we want to express particular appreciation for the efforts of the District administration to keep us informed about the developing budget and likely scenarios. The teleconference meeting that Superintendent Kim Grady held on May 27 was particularly helpful in alerting us to possible scenarios. This was followed by information Kim distributed regarding anticipated capital expenditures for facilities and schools in the coming years. Even though there remains considerable uncertainty about what levels of State aid will be made available to the District or what the level of aid might be in coming years, it is helpful for us to know a range of possible scenarios so that we can, on behalf of Town residents, keep in mind the necessity of reserving funds for future eventualities.

Planning for future eventualities is of particular importance in capital budgeting, along with the associated requirements for maintenance and upkeep of the investments in plant and equipment made by our communities. Indeed, demonstrating careful planning and prudential management of school district capital was an important component of scoring the application for state funding support for the recently completed Mount Greylock School

project.

The MSBA’s Maintenance and Capital Planning Best Practices statement recommends:

“Municipalities and districts that are serious about preserving their assets consistently set aside funds to keep up with the necessary and ongoing capital improvements. This can be effectuated by the creation and use of segregated local funds or a stabilization fund reserved for use on capital projects….”

The same guidance document also recommends careful attention to annual maintenance, distinct from capital improvements:

“The district should monitor the percentage of the budget spent on buildings, grounds, and equipment maintenance from its entire operating budget (according to DESE data, the state average of non-utility maintenance, not including custodial costs, in 2010 was 2.5% of the total district operating budget.)”

A plan of careful and cautious management is essential to the long term health of the district, as has been demonstrated by the use of the capital improvement reserve at Williamstown Elementary School. For at least the next two fiscal years, it seems likely that the pandemic and associated economic downturn will reduce the amounts of state aid and local revenues, and possibly increase some operating costs. This makes it imperative to exercise caution in planning new capital expenditures and prudence in maintaining what we have.

From discussions within the community prior to the approval of the project, we understand that a capital improvement reserve fund for Mount Greylock School has been expected to be at least $1.5 million, to be set aside from the Williams College gift. From such a fund a reasonable annual draw of five percent or less can be taken in perpetuity that could cover many of the core capital needs for Mount Greylock identified in Kim’s outline of expected capital expenditures over the next decade. Furthermore, current building systems (especially heating and ventilation and electronics) are more complicated, interdependent, and sensitive than those of the past. As a result, they tend to be more expensive to repair and replace.

We hope that the budget proposal from the School District continues this practice of prudential management, by retaining at least $1.5 million as a capital improvement reserve. We would endorse such a plan and would recommend it with enthusiasm to our community.

We look forward to continued conversation and collaboration as we navigate the current economic downturn and period of tight budgets, and encourage you and the School Committee to reach out to any of us on the Finance Committee if you have questions or if we can be helpful in any way. We also welcome a joint meeting should you wish to arrange one with us.

Sincerely,

Stephen Sheppard

Chair, Williamstown Finance Committee

As approved by the following members of the Finance Committee:

Paula Consolini

Melissa Cragg

Charles Fox

Beth Goodman

Elaine Neely

Stephen Sheppard

Michael Sussman