Residents vie over $1m surplus

Tewksbury appears to have an unexpected $1 million left over from last fiscal year's budget.

Now a group of parents, determined to reduce class sizes across the board, wants to use some of the money to hire more teachers. In return, the group is pledging to withdraw a contentious article from Tuesday's Special Town Meeting warrant to cut spending on the public library.

The wrangling over financial constraints and school cutbacks accelerated last Tuesday with selectmen's announcement that the budget for fiscal 2006, which ended June 30, had about $1 million in free cash.

The announcement stunned residents. Earlier this year, school officials barely avoided eliminating non-varsity sports and almost began charging bus fees. After voters rejected a $1.8 million tax increase in June, 10 teaching positions out of 25 retirees were cut.

``It was unbelievable," said James Cutelis, a lawyer who heads a parent group called U25, which wants average class sizes to be under 25. ``The town's been going through agony for nine months, and there was a million dollars in there."

But a state official representing the Department of Revenue, which certifies the so-called free cash -- which results from higher-than-expected revenues and lower-than-expected spending -- said the amount shows good financial practice.

``Underestimating revenues is very sound financial practice," said Lydia Hill, spokesman for the department. ``It creates a buffer for the current fiscal year, because at the end of the year, they're not scrambling to make up deficits."

Hill said the department recommends that free cash range from 3 to 5 percent of a community's total operating budget. Tewksbury's is at 1.4 percent of the town's $73.5 million budget for fiscal 2007. Free cash from fiscal 2005 totaled $787,793, reversing a downward trend, said Hill.

``The parents should be incredibly pleased that Tewksbury appears to have such a reasonable free-cash number. . . . To my eyes, it looks like Tewksbury is doing its financial job," said Hill.

Town Manager David Cressman stressed that the dollar amount has not been confirmed by the Department of Revenue, which audits the town's accounts. Cressman cautioned voters not to fund additional salaries with money that may not exist next year.

``You don't make free cash part of your operating budget. . . . If you have a downturn in free cash, you have no buffer," he said. ``The more free cash you're using, the more risks you can have."

Cressman said he believed the free cash resulted from ambulance fees and robust investment earnings. He declined to provide details.

State officials said it is not unusual for towns to have large cash surpluses when year-end financial statements are finalized. In fiscal 2006, neighboring Chelmsford had $1.45 million in free cash, or 1.59 percent of its total operating budget. Billerica had $1.6 million, or 1.38 percent. Wilmington's free cash was $3.9 million, or 6.08 percent; and Andover's was $3 million, or 2.5 percent.

Cressman cautioned that with ongoing contract negotiations for the unions, the town's fiscal challenges will not be resolved by the one-time cash surplus.

Cressman said he wants to hold aside the extra money to cover wage increases for the town's employees, noting that all union contracts ended in June.

In August, the U25 group filed three warrant articles that would reconfigure pension fund investments, shift more of the tax burden onto businesses, and transfer funds from the library's budget.

But Cutelis told library officials Monday that the group will withdraw the request to shift $200,000 from the library's budget to the town's rainy-day fund, and then eventually fund salaries for teachers. It stirred controversy and raised the ire of the town's long-tenured library director, Elisabeth Desmarais, who publicly voiced opposition.

U25 also wants to amend an article submitted by Cressman which proposes to hire three elementary teachers and replace a school bus that had been eliminated from the budget, using a portion of the additional $171,000 that was received in state aid this fiscal year.

The group now wants a total of 10 teachers hired. Cutelis said the midyear hirings would cost $175,000 for fiscal 2007, and salaries for fiscal 2008 would come from the remaining $825,000 in free cash.

Another of the U25 group's Town Meeting articles seeks to shift a greater percentage of the tax levy onto commercial and industrial businesses and save homeowners about $200 a year in property taxes.

The third article seeks approval for the creation of a Town Employee Pension Review Committee, consisting of seven members, charged with reviewing the Middlesex Retirement Board's investment performance, annual costs for administration overhead, and its unfunded liability. Cutelis said that better-performing investments will require less tax revenue to fund the pension benefits.

Cutelis criticized town officials for poor forecasting for fiscal 2007, and said he had alerted them of a surplus in March after scrutinizing the proposed 2007 budget and finding an extra million dollars. He said he brought it to officials' attention.

``When we added up all the numbers, there seemed to be a million more dollars available than what they were disclosing," said Cutelis. ``They ridiculed us and said there was no such money. It turns out we were right and they were unaware of what their real money was."

Cutelis and Selectman Jerome Selissen called for an audit of the town's finances.

``I'm asking for a detailed analysis as to where the money came from," said Selissen, a financial manager for Hanscom Air Force Base, with 36 years experience in accounting and finance. ``Once the money gets certified, let's determine why is it there. How did we miss it?"

Town Meeting begins Tuesday at Tewksbury Memorial High School at 7 p.m.

Joyce Pellino Crane can be reached at crane@globe.com.