In preparation for a projected insurance premium increase in 2025, Glenys Salas, the newly appointed Finance Director, has unearthed several budgetary deficiencies that could result in a $2.6 million deficit across town and school self-insurance allocations.
Salas, speaking at the May 23 Board of Finance meeting, cautiously labeled the figure as a worst-case scenario, acknowledging the possibility of it being smaller.
The primary component of the deficit stems from $1 million allocated as revenue from the town’s fund balance, which lacks corresponding expenses elsewhere in the budget.
“We anticipate a $1 million deficit as of June 30, 2024,” Salas stated.
Attributing the deficit to an overly optimistic estimation of unassigned fund balance revenues, Salas suggested that the actual figure would likely be closer to $200,000.
Additionally, Salas identified a revenue shortfall of $500,000 and a $100,000 deficit in the school budget resulting from an expired grant.
Furthermore, based on 2024 claims to the town’s self-insurance, Salas estimates that expenses will surpass the self-insurance allocation by $1 million.
Barney Molloy, a member of the Board of Finance, emphasized that future budgets may require a seven-figure increase in the insurance line item to address these challenges.
Despite the shortfall, Salas reassured stakeholders that the town’s overall financial health remains robust, with sufficient liquidity to meet obligations.
Efforts to realign the budget are expected to extend over multiple years, Salas noted.
While proposing the appropriation of the $1 million elsewhere in the budget, Salas cautioned against tapping into the fund balance, as it could jeopardize the town’s AAA credit rating with S&P Global, which requires maintaining a 12% fund balance.
Salas recommended cost-sharing initiatives between town and school employees to mitigate the impact of the insurance increase, suggesting an increase in contributions to 9%.
The Board of Finance, alongside the Board of Selectmen and Legislative Council, will continue discussions on potential remedies for the shortfall in forthcoming meetings.
