Woodstock CT Café

This perhaps naive proposal was published at the Cafe on April 5th 2006. This is, of course, what the Woodstock Fire Department is doing with their capital improvement fund; and this makes sense to Ron, me, and in some other parts of the world. In a comment below, ‘JEB’ says that this is standard practice for private companies; but this practice is not limited to private for-profit companies. It’s also practiced by every college and university in the United States that receives Federal funding. The Feds not only fund the direct costs for research; within the same grants they fund “indirect costs” calculated by certain standards. A major fraction of indirect costs is based on depreciation of fixed assets (like buses, furnaces, and Donald Kennedy’s sailboat  (while he was Chancellor at Stanford Univ.).

In examining the budget (in 2006) I saw no method of accounting for the depreciation of fixed assets in either the Town or Education Budgets. Nevertheless, there were many line items that cover the cost of significant fixed assets. I am not an accountant, but I am familiar with non-profit budgeting on a similar scale to the Woodstock K-8 school system. In my experience, depreciation of fixed assets is an annual part and line item in developing the budget. In non-profit institutions like colleges and universities, income is needed, annually collected, and stored in dedicated funds to ultimately replace fixed assets after they become obsolete.

Take the salt facility which needed to be replaced, for which there were apparently no funds in the Town treasury (this clearly was the reason why no Selectman would deal with it until the town had no choice). After this facility was built, its value should have been depreciated according to standard guidelines and taxes should have been collected annually (for something like a 20-30 year lifespan) to account for its diminished value. Then, at the end of the lifetime of the salt facility, money in the ‘salt facility fund’ would have been available to replace this facility.

The costs of all fixed assets, such as property and equipment, should be recognized through depreciation over the life of the asset and taxes should be collected to cover the dollar amount of depreciation each year. The proportion of taxes collected specifically for depreciation of each type of fixed asset should be placed in a fund dedicated to each specific asset. These funds should be invested, monitored, and reported monthly at Board meetings (BOS, BOE, and BOF) in order to provide for the proper vigilance and transparency on behalf of the taxpayers. Read the rest of this entry »

by Kevin Ford

Hey Tax, I can answer some of your questions. I think many have already been answered by Snuffy and others though.

1) Renegotiating the teacher’s contract. There is some talk of requesting that the teachers do not take raises or some similar ideas (working a day(s) for free like what happened in Lynn, MA) but before that motion is even put to a vote the board wants to make sure some of the budget unknowns are answered. We can only request this, we have no power to dictate anything. But as I said, until some unknowns are worked out no motion has yet hit the table.

2) We can’t move to a pay for busing program. We are mandated to provide transportation. As I understand it we don’t have to provide transportation if you live within a certain radius of the school but Dr. Baran advised against making them walk due safety issues (no sidewalks in town).

3) The “phantom students” issue is non-sense. There is no extra money. I listened very carefully when they explained this in the last public meeting. This is what I understand they mean: several years ago the number of students budgeted to be sent to the Woodstock Academy was overestimated because several students ended up moving/going to other schools after the budget was approved. In the minds of CPS members this means that the overall budget would have been lower that year. This is unlikely as I’m sure other programs would have been put in place, such as the permanently ignored capital plan, had that Woodstock Academy spending not been there. But for the sake of argument let’s go with it. Their logic then goes that since the budget total would have been lower that year, our cap in subsequent years would be lower and so this year our budget is $500,000 more than it would have been has those students not been budgeted for. Read the rest of this entry »

by Ron 

(Admin edited this statement to try to add some clarity. I hope we have it right Ron. Don’t hesitate to let us know if we don’t. The comment was left in it’s orignal wording. Admin)

What is missing from the discussion is the current laws regarding long term purchases of large capital expenses. One way is to have entity ownership like the fund being questioned which is controlled by the Woodstock Fire Department (legal entity).

Back in the late 90’s, I started to look at how the town could help rebuild playing fields in town. The law prevents having a town owned/controlled savings account for long term purchases. It became apparent that funding for any large purchase for a capital project had to be handled in a unique way within this town (because of Prop 46 and not wanting to take on long term bonding).

Example: When an individual wants to add on/rebuild/enhance their home they could either take out a loan or save. Most people that have dealt with loans and understand money issues would prefer to save and then spend from that savings account to eliminate the expense of interest from that purchase.

State/Federal laws limit towns from saving for long term purchases (read old fire trucks needing to be replaced at large expense) and towns do not want to have to go to bonding referendum every 2 years or carry that debt. How else would you do this? Snuffy has explained that this saving and then purchase is the method used by the WA and WFD. This approach has reduced the total money being spent because these entities are not paying interest by paying cash for these items.

There can be a debate about how the towns people can review these purchases but having seen the “Vote down almost all spending above Prop 46 approach for over 20 years” it is no wonder that these entities found a way to ensure that long term purchases are handled in a cost effective manner.

BTW: For WA to pave the parking lot at the chruch so that the students can use that parking lot during school hours and not have to purchase land to house these cars is rather an intelligent way to solve the problem.