SAD 75 to consider reserve fund for capital projects

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TOPSHAM — As its fiscal year 2019 budget deliberations ramp up this winter, the School Administrative District 75 Board of Directors will discuss whether to establish a capital projects reserve fund for the coming years.

The district has a capital maintenance line within its general operating budget, but not a separate capital reserve fund for long-range projects, Business Manager Mark Conrad said in an interview Jan. 17.

“If the voters approve setting (a reserve fund) up, which they have to do, you would then be able to go to the voters and request approval to place funds into that account over time,” Conrad said. “And then when you had a project that met the requirements of the fund, and you had sufficient funds, you would request a withdrawal from that fund to pay for the project.”

Through such long-range planning, the district can set money aside for major projects over multiple years, instead of seeking to borrow funds through a bond, which comes with added interest costs.

The fund could only be used for capital projects, as opposed to using the money to pay salaries, Conrad added.

Roof replacements, repaving parking lots, and new heating and ventilation systems are among projects that a capital fund could address, he noted. The capital maintenance line would be retained for smaller projects.

While district officials have expressed interest in the idea of a fund, the fiscal year 2019 budget process is still in its early stages, the business manager said. SAD 75’s expenditures, revenues from the state, local tax impacts, and the district’s fund balance are all major factors in framing the district’s annual spending plans.

Administrators will not know the actual projected state subsidy for the coming year until early next month, Conrad added.

Generally speaking, the healthier SAD 75’s fiscal 2019 outlook, the better the chance a capital reserve fund would be created, although “all the (School Board) can do is bring it to the voters for approval,” should the panel wish to propose it, Conrad said.

The panel could propose establishing the fund for fiscal year 2019 along with an initial deposit, but it would be too early for any expenditures out of that fund, Conrad explained.

Any addition to the fund in subsequent years would go before voters, “and that would depend on financial circumstances for the district moving forward,” he said. “I think what’s nice about it is that you can be flexible with it over time; in years where you have a larger surplus or more revenue coming in, you can seek perhaps more than you might in leaner years.”

The money “simply accrues or remains in place until you expend it,” Conrad added.

The School Board is due April 26 to approve the budget, which then goes to district voters in two separate decisions on May 24 and June 12.

Alex Lear can be reached at 781-3661 ext. 113 or alear@theforecaster.net. Follow him on Twitter: @learics.

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A Maine native and Colby College graduate, Alex has been covering coastal communities since 2001, and currently handles Bath, Topsham, Cumberland, and North Yarmouth. He and his wife, Lauren, live in the Portland area, and Alex recently released his third album of original music.