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Finance Committee debates draft policy on budget transfers and reserve fund use
Summary
Members reviewed draft language to clarify when departments should use interdepartmental budget transfers versus reserve fund transfers, discussed DOR guidance and tracking responsibilities, and asked staff to align the policy before budget season.
The Boxborough Finance Committee spent an extended portion of its meeting reviewing draft language intended to clarify when the town should use interdepartmental budget transfers and when it should rely on reserve fund transfers (RFTs) for unforeseen expenses.
A staff member summarized guidance from a recent meeting with the Department of Revenue: “They said that deficit spending is within line item and a line item,” relaying the DOR interpretation that deficit spending can be considered at the line-item level depending on how the town sets up its budget. Members debated whether the town should prefer RFTs for truly unforeseen emergency expenses and reserve year-end interdepartmental transfers for balancing totals. The Chair said the draft currently treats budget transfers as “reallocation of funds allotted in the operating budget between departments” and proposed adding language to make RFTs the first line of response for unanticipated expenses.
Committee members also discussed who should maintain records of transfers. One member argued that the finance director or assistant accountant should be responsible for tracking rather than volunteers. The committee agreed to revise the draft policy for consistency with the RFT policy and to present refined language to the Select Board and finance director for review ahead of budget season.
