METHUEN — As Methuen works to approve a new budget for the city to operate with in 2020, the effects of past money missteps still linger.
For the second time in a month, city councilors decided Monday to spend money from Methuen's free cash account — this time $450,000 to re-pave the high school parking lot and some city streets. The move leaves the account with a balance of $729,948, according to Interim City Auditor Sheryl Wright. That's below even the minimum amount that the state suggests cities have on hand for unanticipated, one time costs.
Under sound financial policies, a community's free cash should be equal to 3 to 5% of its annual budget, the Division of Local Services spells out in its guidelines.
Fiscal Stability Officer Sean Cronin — appointed by the state to oversee Methuen's finances last year after the city was granted $4 million to mend overspending in the School Department — said every community should strive for that standard. In Methuen's case, however, the available funds — between free cash and a separate stabilization fund — are 2% of the budget.
The two accounts consist of excess revenue estimates and unspent amounts in departmental budget line items for the year just ended, as well as a portion of meals excise tax collected by the state.
Two city councilors have been vocal about resisting withdrawals from the accounts, which have most recently been from free cash for the paving projects and to fund a remaining gap in the city's contract with the police superior officers' union.
"We're slowly trying to build it out. I'm not going to vote to use free cash for anything I consider mismanagement," Councilor Steve Saba said. "If we're going to be spending free cash, it's going to be for capital improvements or infrastructure. I draw the line to tap into it more."
Councilor James McCarty, who was not at last Monday night's meeting where councilors voted 8-0 in support of spending $200,000 on the high school parking lot and $250,000 on roads in need, said he would have voted against the appropriations had he been there.
"I typically vote 'no' on all free cash expenditures," McCarty said. "(In this case) we were told that parking fees from the high school were going toward paving the high school. This should be a school department issue. I'm not sure whey we're using free cash to do this."
Mayor James Jajuga said the school department doesn't have enough money to fix the parking lot as quickly as he deems necessary, and the $100 parking fee for students is not implemented until fall.
It's also the start of a shift in the way the city functions, he said.
"It's always been a school side and city side way of looking at it. In actuality we are all one community," said Jajuga, who is also the School Committee chairman. "Certainly the city knows that we had to borrow $4 million this year, and with that we were required to hire a CAFO (Chief Administrative Financial Officer). It means there's going to be a greater blending of city and school money under the CAFO."
That person, Maggie Duprey, will start in the newly created position July 1. Duprey will supervise the financial services, activities and budget of all city departments, including the schools, and will report directly to the mayor.
Her position came after the City Council submitted a home-rule petition to the state for permission to borrow funds last year to pay off a nearly $4 million cost overrun by the School Department. It is illegal in Massachusetts for municipalities to run a deficit in any budget line other than snow and ice removal.
The money came with immediate state financial oversight — in this case Cronin, the fiscal stability officer. Unlike Cronin's position, Duprey's role will be permanent in the city.
"We're going to get an updated look at things later into the summer or early fall, when the city submits updated balance sheets," he said. "But it's about moving forward in the most effective way now."