By Nate Jones

Staff Writer 

Monday, approximately one month after Cape Elizabeth Superintendent Alan Hawkins discovered he could receive $421,000 less in General Purpose Aid (GPA) funding from the state, the town council voted to transfer $200,000 from the municipal “undesignated surplus” account to a similar school account in an effort to “share the pain” of the GPA curtailment, Finance Committee Chair and Town Councilor Anne Swift-Kayatta said.

“I don’t think we should be using undesignated surplus for school finances, but this is halfway through a fiscal year,” Swift-Kayatta said. “There is a true urgent need of the school department.”

Most councilors agreed with Swift-Kayatta that the $200,000 transfer would not set a precedent for future school financial troubles. The transfer will be limited to 50 percent of the curtailment of $200,000, which ever is lower. Some were opposed limiting the additional school funding to 50 percent of the total curtailment, the final amount of which Kayatta said could be decided by the legislature as late as February.

“If we’re willing to give them $200,000, why not give them $200,000 even if the curtailment amount is less?” Councilor Sara Lennon asked.

Councilor David Sherman agreed that the 50 percent cap was unnecessary, but Town Council Chairman Jim Rowe said he is concerned pulling excessive funds from the “undesignated surplus” account could affect the town’s bond rating. 

“[The $200,000] brings [the undesignated surplus account] below the recommended level,” Town Manager Michael McGovern said. “Some argue that if you never brought [the undesignated surplus account] below the recommended level, what’s the purpose of having it. On the other hand, if there’s a time to preserve cash flow, now is it.”

Kayatta compared the municipal “undesignated surplus” account to the “working capital of a private sector firm” and said she was concerned about depleting the account given the financial outlook for the next fiscal year.

“We need these funds if catastrophe does strike, or the economy goes into decline and people don’t pay their taxes,” she said. “It’s prudent to help the schools but not do more. We may have some other need for it.”

 The motion to transfer the $200,000 passed with a 4 to 2 vote with Lennon and Sherman opposed. 

“The policy [for the undesignated surplus account] was well-thought out at the time we created it and it still is,” Councilor David Backer said. “Obviously we have extraordinary circumstances. Although [the transfer] may be imperfect on either side, I think it’s a reasonable midpoint.”

While the school attempts to deal with this year’s potential GPA shortfall, McGovern said the municipal road maintenance program has been under funded for years. He suggested allocating bond funds approved in 2007 for certain projects.

“We have approximately 60 or 61 miles of road in Cape Elizabeth,” he said. “It would cost roughly $6 million to pave them all. We’ve been spending $410,000 to maintain them when we should be spending $700,000.”

McGovern recommended the council approve spending $500,000 in bonded funds “for maintaining road and parking lot infrastructure” along with $425,000 to repair Spurwink Church, $15,800 for improvements to the Greenbelt, $30,000 in outstanding debt related to the high school bleacher project, and provide the school with nearly $74,000 to use as the school board deemed appropriate. His recommendations excluded funding sidewalk, drainage and intersection improvements to the town center, which would leave an estimated $300,000 in already bonded funds unallocated. 

“Priority should be given to funding needs for existing infrastructure and not new infrastructure that is desired,” McGovern said. “Freeze the [$300,000] which could be used for a whole host of recommendations that come forward. Until then, it will sit in an interest-bearing account.”

Lennon suggested using the $300,000 to help the school recover from costs associated with damage done to rooftops during last month’s ice storm, a project McGovern said should remain within the annual school budget. 

Former Town Council Chairman Mary-Ann Lynch said the stoplight proposed at the intersection of Route 77 and Shore Road – a project the council voted to table until May – should still be a priority of the council. 

“The need [for the light] has been documented for over 20 years,” Lynch said. “I understand times are hard, but canceling the traffic light will save no money, what you are proposing to do is use the money bonded for one purpose for another. You are killing a safety project.”

 “If the schools need a roof repair, it’s in their budget right now, they’re just choosing not to do it,” McGovern said. “If these were bondable items they would compete for these monies.” 

The council unanimously approved the allocation of bonded funds as McGovern recommended.