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Board debates holding school funds to earn town interest; auditor recommends policy
Summary
Members debated proposals to centralize cash to increase interest earnings and how interest would be allocated. The auditor said state law and town charter don’t dictate specifics and recommended a board-approved cash-management and investment policy to set authority and procedures.
A recurring theme during the audit Q&A was whether the town should aggregate idle school funds into town accounts to earn higher interest and how any extra interest would be allocated. Chair Rob said he supported increasing interest income but cautioned against creating processes that could delay school payments: "What I don't want is to gum up the works and put hurdles up internally that could cause us a problem that's worse than whatever interest income that we might derive from a new process," he said.
Auditor Mike Van Deventer told the board that neither state statute nor the town charter addresses this precise question and that the practical approach is for the boards to adopt a cash-management and investment policy setting parameters for interest allocation: "It would be a board policy that addresses it," he said. Members discussed options—pooling certain funds into short-term investment accounts (STIPs), treating permanent donor funds differently from operating funds, and ensuring that any policy preserves the school’s ability to pay bills on time.
No formal vote was taken. The board agreed to convene a dedicated policy session in the fall to draft clear rules on when the town can centralize funds, which accounts earn interest and how interest is distributed across permanent donor funds, special revenue funds and the general fund.
