Proposed financial policies set stage for new budget strategies
At the October 22, 2026, Board of Finance (BOF) meeting in Stafford, the board discussed proposed changes to the Town’s financial policies. The policies represent something bigger than bureaucracy. In many ways, they represent the future of the town as the BOF sets goals for emergency funds and capital improvements projects. The ambitious plans have at least one public commenter concerned.
The policies are lengthy, so we will post them below, and provide context about the discussion as needed.
Fund Balance Policy
It’s only been within the last three years that Stafford has managed to build up its unassigned general fund balance to a healthy level that meets its own requirements. That’s been due, in large part, to increased revenue. The Town’s current policy says the unassigned fund balance should be 10%-14% of the operating budget — but the BOF wants to increase that to 12%-17%. Why, especially when it’s had such a hard time meeting the less conservative goal? Well, according to Interim Finance Director Lynn Nenni the grand list growth is minimal, no formal Capital Improvement Plan (CIP) exists, and the potential for weather-related clean-up costs exist.
BOF member Tony Pellegrino felt the low end of the new goal could be higher. As the policy puts it, “Given Stafford's reliance on semi-annual property tax collections, maintaining adequate reserves helps reduce or eliminate short-term borrowing costs and ensures stable cash flow throughout the fiscal year.”
The fund balance could be used for:
Severe weather emergencies requiring immediate response or repair
Significant, unexpected revenue shortfalls
Nonrecurring expenditures or one-time capital needs
Avoiding short-term borrowing for cash flow stabilization
Click to enlarge the documents and read the policies.
Contingency Fund
This year, Stafford included $60,000 in the budget for unexpected needs—otherwise known as a contingency fund. But if you were wondering exactly how Stafford would build up the unassigned fund balance mentioned in the last section, this is an important policy to pay attention to.
It calls for the Town to “budget an annual contingency appropriation equal to 1.0% to 1.5% of the General Fund operating budget.” It could be used for weather-related emergency expenses {snow, rain, wind events); unanticipated repairs to buildings, vehicles, or infrastructure; legal or personnel costs exceeding departmental budgets; State or federal revenue shortfalls; other one-time, nonrecurring needs that cannot reasonably be anticipated during budget development. And what if none of those expenses pop up in a given year? “Unless otherwise specified, any unused contingency appropriation shall close out to the General Fund and increase the unassigned fund balance. This supports the Town's fund balance policy and strengthens reserves for future emergencies and cash-flow stability.”
In other words, this policy helps support the previous policy. And if at some point Stafford actually manages to max out it unassigned fund balance goal there’s another plan in place:
If, after year-end closeout, the Town's unassigned fund balance exceeds the maximum
level established in the Fund Balance Policy, the Board of Finance may vote to:
Assign a portion of the excess to a Contingency Reserve - Assigned Fund Balance, which may be used to offset or supplement the contingency appropriation in future
Assign excess funds to other priority purposes such as capital needs, debt reduction, budgets; or or infrastructure.
Click to enlarge the documents and read the policies.
Capital Reserve Fund
Capital Improvement Projects are typically large scale projects to enduring infrastructure. Want a skate park? A capital improvement fund could pay for that. Need a new school roof? A capital reserve fund could pay for that. Generally, these funds allow towns to avoid borrowing money (and paying interest) for larger scale projects. Stafford has implemented a budget line time for this, but it doesn’t have a formal policy to govern it—despite one being introduced back in 2017. The BOF also discussed the need for a committee to develop a capital improvement plan to govern how and when the money should be spent.
Click to enlarge the documents and read the policies.
Click to watch the BOF meeting discussion of these new policies.
