Lawsuit settlement frees up serious cash for Southborough

by susan on June 9, 2010

We’ve all heard the dire predictions about how tough things are going to be next year for municipal budgets, but last night the town got some good fiscal news. More than $1.3M the town had been holding in reserve has just been freed up thanks to the settling of some lawsuits.

The lawsuits were between the town of Southborough and AT&T regarding the valuation of property in town owned by the telecommunications company — in particular, switching stations. The Southborough Board of Assessors had been holding nearly $2M in reserve pending the outcome of the lawsuits.

At last night’s Board of Selectman meeting, Town Counsel Aldo Cipriano announced the suits were all recently resolved. According to the settlement, Southborough will pay out about $470K. The rest of the money — more than $1.3M — will be made available to the town.

The dispute over the telecommunications property dates back to 2004, and Cipriano said reaching a settlement was “complicated.” Selectwoman Bonnie Phaneuf commended Cipriano and Town Assessor Paul Cibelli on reaching a resolution. “A lot of hours have gone into this,” she said.

Southborough wasn’t alone in its dispute with AT&T. Other towns in the state face similar legal challenges, but Cipriano said Southborough was the first town in the Commonwealth to resolve their dispute.

Presumably it will be up to Town Meeting to decide how to allocate the $1.3M windfall. If it were up to you, what would you do with the money? Hire back some teachers? Restock the stabilization fund? Buy St. Mark’s another lawn mower?

{ 24 comments }

1 John Kendall June 9, 2010 at 10:31 AM

Put it in the Stabilization Fund

2 John Boiardi June 9, 2010 at 5:50 PM

John,
I hope you or Al win out on usage of the windfall. Notice those who propose new ways to increase spending rather than reducing town debt or forestalling tax increases.

3 carrie alpert June 9, 2010 at 11:38 AM

hire back a teacher, an aide–some type of support staff for whichever grade needs it the most. Give Pat over at the Food Pantry a bit of money to work with for the upcoming year–with the remainder invested, not just sitting doing nothing earning pennies to the dollar.

4 Al Hamilton June 9, 2010 at 12:33 PM

Our dept service for the next 2 years will remain high. After that it begins to roll off as we pay off some of our outstanding debt. FY 2014 might be an appropriate time to seek a Prop 2.5 override as the debt reduction would potentially offset any tax increase.

So I would recommend that the $1.3 million be used to supplement the FY 2012 and 2013 budgets so as to avoid more tax increases and avoid a Prop 2.5 override in those years. This will manage the tax rate until 2014 when the debt portion will begin to decline.

5 Kelly Roney June 9, 2010 at 4:33 PM

Sounds like a good idea, Al.

6 carrie alpert June 9, 2010 at 5:24 PM

that sounds like a good course to take Al, where do the monies go until then?–that is if it is approved it is the route to take.

Also, while on the subject of what to do with the funds–out of the 1.3 million dollars how does the town food pantry get access to a smidge of it to keep it well stocked over the next few years?

7 Al Hamilton June 10, 2010 at 9:45 AM

Carrie

I believe that these funds will eventually (Fall 2010) be included in “Free Cash”. Once the funds have been certified as part of “Free Cash” Town Meeting decides how to dispose of them. They have several options:

A. They could decide to spend some or all of it in FY 11 (July 2010 to June 2011).
B. They could decide to put some or all in Stabilization.
C. They could decide to spend some of it in FY 12 to supplement the budget and keep the balance either in “Free Cash” or “Stabilization” for future use.
D. They could decide to do nothing leaving the funds in “Free Cash” though this is very unlikely

Regardless I believe that the only body that can authorize spending the money is Town Meeting. The first opportunity to access the money for any purpose would be the first Town Meeting after “Free Cash” was certified.

This is my understanding, I might be wrong about the certification part and if anyone else has better info I would love to hear from them.

I would like to dispel one myth – This is not “Found Money” each of us paid a premium above and beyond what was required fund town government to accumulate this reserve in the event that we had to repay this money to the telecoms companies as a result of the lawsuit. As such this money came out of our collective pockets.

8 John Kendall June 10, 2010 at 10:45 AM

Thanks Al. I was a bit concerned reading todays MetroWest Daily news. The article called the money a “windfall”, which is far from correct.

9 John Boiardi June 9, 2010 at 5:47 PM

Al

Great idea. I hope people agree with yiur astute understanding of town finances.

10 Sue Rosenthal June 9, 2010 at 10:41 PM

Hire back the teachers. Definitely.

11 John Boiardi June 10, 2010 at 3:00 PM

Sue,

Watch the school committe meetings. Two leaves of absence, one retired. I don’t believe that any teachers have been called in and handed a pink slip regarding the nine proposed teacher cuts. The threat of teacher cuts is used annualy during budget negotiations.

12 Kathleen Harragan Polutchko June 12, 2010 at 4:13 PM

John,
I am sorry but I cannot let that misrepresentation go uncorrected. Yes, there were unanticipated retirements and leaves of absences that helped alleviate dispursing pink slips, but the truth is that every school and student in the Southborough system will be affected by fewer classroom teachers next year. The incoming Kindergarten lost 1.5 teachers, 3rd grade lost a teacher, 4th grade lost a teacher and Trottier lost a classroom teacher and a specialist. There are fewer custodial services and fewer services for students with special needs. These teacher cuts are very real and were not just used as a threat during budget negotiations. You as a taxpayer should be thrilled that the administration managed this workforce reduction through attrition and not pink slips as that saves the tax payers much in unemployment compensation that now we will not have to pay.
Kathleen Harragan Polutchko
Southborough School Committee

13 John Boiardi June 14, 2010 at 2:29 PM

Kathleen,

Spare me the tears. Misrepresentation? Do we not hear about the damage that even one teacher loss makes at budget time? We must not attend the same meetings. Based on the teacher loss you state, has Southborough education tanked? fallen off a cliff? When will you see or admit that town,state and federal budgets are running out of money. The days of 3% raises plus 3% step/lane increasese plus low participation in increased medical costs(compared to the private sector) are comming to an end.. I don’t necessarily agree with cutting the budget by cutting teachers. I feel that there are many ways to control increasing school budgets without cutting teachers. Such items as curriculum leaders,instructual coordinators,professional development leadership (aren’t teaching colleges doing their job),teacher/staff professional development, instructional hardware,software, equipment etc. can be be leval funded or trimmed.

Please spare me the education/teacher/union talking points.

14 Kathleen Harragan Polutchko June 14, 2010 at 6:40 PM

John,
I didn’t mean to offend you by using the term misrepresentation, but I did need to correct your statement.
No, we do not attend the same meetings. I have never seen you at a school committee meeting and I don’t want to spend even more evenings away from my kids to attend your Advisory Committee meetings. However I did attend them during budget season, so I know you received the schools’ many iterations of budget proposals. Here are the figures in the final budget document that was distributed and passed at Town Meeting:

Curriculum Leaders – Bldg Level (2220): 0% increase
Professional Development Leadership (2351): 73.35% decrease
Professional Development Teacher/Staff (2353): 11.13% decrease
Professional Development Substitutes (2355): 0% increase
Instructional Materials (2411): 22.15% decrease
Instructional Equipment (2420): 45.8% increase (due to rental lease of copiers – we need reliable copiers because we no longer have new instructional materials or textbooks)
Other Instructional Hardware (2453): 3.51% decrease
Classroom Instructional Software (2455): 0% increase
Professional Development (2359): 0% increase
Instructional Technology, SPED (2459): 0% increase

So you see, most of those items that you referenced were level-funded or trimmed. No tears, just facts.

15 John Boiardi June 15, 2010 at 8:49 PM

Kathleen,

Thank you for the budget figures for the line items I referred to. I am glad to see that these items were cut or had zero increases. My question to you is : If you take the total of the budget lines you referred to, and we enter a double dip recession or if the state contribution to school funding and school transportation funding drops lower, would you forgo these items to save teachers? Would you make the choice between teacher enhancement/development dollars or forego them in order to keep from laying teachers off? Experience seems to be ( not necessarily in SBRO) that teacher unions “eat their young” so to speak and will vote against giving up anything thereby forcing the layoff of the least senior teachers. Again, in this economy, hold on to your hats.

16 carrie alpert June 10, 2010 at 6:51 AM

Al, you really do understand and then explain–which is key–town finances in such a clear, concise way. How do we get your idea of what to do with the monies to the right person (s)?

Carrie

17 Al Hamilton June 10, 2010 at 2:01 PM

The organization that is responsible for developing and presenting an overall town budget to Town Meeting is the Advisory Committee. No other body, including the Selectmen, had this responsibility. So I would recommend lobbying the Advisory Committee. I presented this idea to Advisory at the beginning of the year.

There are well intentioned folks who are making plans for these funds even as we speak. If you want to uses these funds to offset tax increases and delay the inevitable prop 2.5 override then you will need to make your voice heard.

18 John Boiardi June 10, 2010 at 2:21 PM

Al,

I am with you!

19 Pat Quill June 10, 2010 at 4:25 PM

It may be a good idea to send out a reminder when these meetings take
place and what is to be on the agenda. I don’t always go to the town
website to see when a meeting is but if I am gently reminded (several times)
I tend to put it in my schedule.

20 Helen L June 10, 2010 at 8:04 AM

hmm, since my taxes have basically TRIPLED on my house in the last 10 years (less than 3K in 2000 to more than 8K this year… with NO additions, etc), do whatever it takes to keep the tax rate DOWN. My income has gone down to less than half it was 10 years ago, this is killing me, and I’m sure many others. I know of one couple who sold their house a few years ago, because their tax bill was more than the mortgage payment on their house. The valuations are just too high, especially on houses that aren’t cookie-cutter and they can’t find good comps for.

21 southsider June 10, 2010 at 1:23 PM

since there is no upcoming Town Meeting, won’t the money automatically go into stabilization or free cash and remain untouchable til next TM?

i’m also curious about future tax bills to the phone company… does the $1.3million represent X years of back taxes? how big or little is X? have we just picked up a big annual tax payer with this settlement?

22 John Butler June 12, 2010 at 12:08 AM

The only money that can be spent is that which is appropriated by Town Meeting for some purpose. No appropriation has occurred, so it cannot be spent yet. However, it also cannot go into the Stabilization Fund without a vote of Town Meeting. Therefore it will next appear as an unexpectedly high balance in the Free Cash account, from which only Town Meeting can move it.

We did pick up a taxpayer in a sense, or rather certain assets whose taxable status was disputed are now indisputably taxable. We have been billing and collecting for years on this property, just holding the money in case the claim that it wasn’t taxable prevailed, and we had to pay it back. It is partially because we were holding it so long that it got so large. However, my understanding is that about a year ago we stopped holding new payments in reserve, because it began to be clear that we weren’t going to lose, even though the settlement was not yet final. Therefore the “new” tax stream actually began about a year ago, and on a one year basis was not big enough to make an impact on the overall picture. So, there is not some new large ongoing revenue source starting now, unfortunately.

23 carrie alpert June 13, 2010 at 1:30 PM

when it does come time for the next town meeting it will be an important point to remember that these monies are not a “windfall”.

Kathleen–perfectly articulated about the teacher situation, or how it has turned out.

24 carrie alpert June 15, 2010 at 7:10 AM

The fact that we are scrounging for new instructional materials for the children is absurdity probably one of my biggest soapboxes yet; when my children are out of the school system i will still be on the supportive side of actually providing the educational materials that students need with which to broaden their set skills. Just ludicrous.
i like and embrace the ENO boards which some of the classrooms have, SEF has funded some of them. YAY SEF! I do not know the exact number our school system has at the moment or how they have all been supported financially-the teachers have a vast amount of material at their fingertips and they are interactive allowing the students to be part of the process.
This year in my son’s classroom the board was really a key part of the learning process and was invaluable. I was also very appreciative to have a teacher who is very adept in computer science, an area that i am not that strong in.

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