December 10, 2010
A simple explanation of our budgets

To the Editor:

School and Town Budgets as simple as I can explain them.

Both overall budget is made up of a General Fund (Fund 10) and some other smaller funds such as the food services fund at the school and the sewer and water precincts at the town. The two 'biggies' are what the annual flap is all about - the respective General Funds for the School and the Town. 

The Town's roughly $18M General Fund is a roll up the departments. Each department presents a budget made up on a collection of line items. The Library and Parks and Rec roll all their lines into one total each. Administration has several sub-groups like Finance, Planning, Tax Collection and so on. Fire, Police and DPW each have sub-groups. Likewise, the school consists of the District and the five schools with various sub-groups.

A budget is built by putting a dollar figure on each individual line item. The Town budget is addressed at the line item level or a grouping of them when being discussed, reviewed and deliberated upon by the Board of Selectmen and then the Budget Committee. On the School side, the process is pretty much the same.

In my words, the Board of Selectmen is responsible for the delivery of services by the various departments and the School Board is responsible for the delivery of educational services in the district. The Budget Committee is an advisory body looking out for the best interests of the community as a whole as each individual member perceives them under the guidelines set forward under RSA 32 and other legislation as appropriate. Of course, there is a natural tension between governing boards (the people responsible for service delivery) and the Budget Committee.

The two General Fund budgets are 'bottom line' budgets. The School Board pays expenses, bills and payroll out from the bottom line of their General Fund. Likewise for the Town through the Board of Selectmen. Each department head (or principal) does their spending from the bottom line of their budget or sub-group there of. Each payment is recorded to an individual line item for accounting and analysis purposes. 

This is the beauty and the ugliness of what is called fund accounting. If an individual line is insufficient, an expenditure will be completed as long as the 'bottom line' is not exceeded. If the line item for heating fuel is not enough to pay for the needed fuel, it will be paid out off the bottom line for the department/school and accounted as under-budget. The real concern is overspending the bottom line, not if there is there enough in a specific line item.

Examples: The Budget Committee might allocate an additional amount for something specific; however, it is spent on something else. More likely, with the current Budget Committee, a specific line item might be reduced and the item is bought anyway if the funds are available on the bottom line. At deliberative session, a motion is made to the general fund might be passed to add or reduce funding and it does not happen as defined by the motion. Are any of these scenarios wrong by law? NO. The vote of the voters and the recommendations made by the Budget Committee are pretty much just advisory and the only thing 'cast in brass' is the bottom line. 

This could happen: The Budget Committee takes a specific item out of a budget. This reduction survives the deliberative session unaltered and is passed at the March voting. If, with the consent of the governing body, an employee gets laid off and the specific item gets acquired. Who gets blamed in the press: the stinkers on the Budget Committee because they slashed the budget and a poor employee was let go. 

A doctoral thesis could be written on any paragraph in this letter; therefore, please consider this a only a top down introduction to town/school budgets.

Bill Gordon





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