New Canaan Board of Finance cleans up reserve accounts
Published 10:04 am, Thursday, June 20, 2013
The extended spring cleaning project involving the New Canaan Finance Department continued at the June 11 Board of Finance meeting with the establishment of some and the elimination of other reserve accounts that had existed unofficially for an unknown number of years.
"There were numerous reserves on the balance sheet. For the proper way to have a reserve, we need board approval," Norton explained. "That process was just being done and never brought to the boards. Now we're bringing to the boards what ones we need."
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The reserves would allow for emergency or overflow spending in the event of an atypical year. The alternatives to creating a reserve for the items would be to fund any shortfalls or emergency expenditures through either a contingency fund, or by special appropriation, which would take weeks to go through town bodies and be published in the newspaper. Another benefit cited was that the money would provide a cushion and even out spending over the years so that budget draws would not have to be made for atypical years.
"Also, it gives departments some incentive to monitor their costs," Board of Finance member John Sheffield added. "If they can manage some part of the excess, that's an incentive."
The reserves officially created ranged from "Heart and Hypertension Insurance Payouts," which will have $667,750 stockpiled from several previous years, to "Reserve for Storm Damage," which will start with $10,000, which will be supplemented in the years to come from overages in the Highway and Parks departments.
Among the eliminations included the $201,000 "Reserve for Town Hall Remediation" and the $30,000 "Reserve for Street Opening Permits" to be added to the Unassigned Fund Balance.
Some on the Board of Finance, such as former First Selectman Judy Neville, had some issues with the idea. Neville asked if it wouldn't be better for the money to have to face the discipline of going through the budgetary process.
Charneski and Norton explained that, in addition to the other benefits, the risks were small, as relatively minor amounts of money would be added to the reserves each year.
"Let's put this in place," said First Selectman Robert Mallozzi, who also is the chairman ex-officio of the Board of Finance. "The ladies (Charneski and Norton) have worked meaningfully to get to this point. Let's see how it works and come back and revisit it."
In the end, all the reserve creations and eliminations were passed unanimously by the board.
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