# The stabilization option **What the stabilization funds could actually do about the school budget gap, and for how long.** Analysis, September 2026. The companion to [the stabilization funds](stabilization-funds.md), which describes what the town holds; this one is only about what can be done with it. --- ## The short version **$3,147,179 is the only balance Town Meeting may spend on anything lawful.** The other $5,914,242 is restricted to the purpose each fund was created for. A school deficit is not that purpose for any of them. **Spending all of it closes FY28 and FY29, and runs out partway through FY30.** That is 2.3 years, after which the money is gone and the gap is $2,197,945 — larger than the one it started on. **Stopping the deposits instead raises about $260,244 a year**, which is recurring money against a recurring gap — the right SHAPE of answer. It covers 28% of the FY28 gap and 12% of FY30’s. So: **neither closes the gap, and they fail differently.** One buys two years and then nothing. The other is permanent and is a quarter of what is needed. --- ## Both options, against the gap ![Stacked bars, one per fiscal year from FY28 to FY35. Each bar is that year’s level-service gap, from $930,273 to $6,751,941. The redirected deposits cover $260,244 of every bar; the reserve covers the rest of FY28 and FY29 and part of FY30, and after that every bar is almost entirely the part still short.](charts/stabilization-option-split.svg) *Both levers pulled at once, which is the most favourable case there is. The deposits are redirected every year and the reserve is spent on whatever they do not cover. It covers FY28 and FY29 outright; by FY35 the gap is $6,751,941 and everything the town has done here covers $260,244 of it.* ![A falling bar chart. The fund opens at $3,147,179, is drawn down by $670,029 and then $1,270,230, and is empty from FY30 onward.](charts/stabilization-option-burndown.svg) *The same scenario, from the fund’s side. It does not taper — it stops. $670,029 is drawn in FY28 and $1,270,230 in FY29, and from FY30 there is nothing left to draw and the deposits are doing it alone.* --- ## 1. Can the town stop putting money in? Town Meeting voted **$4,051,527** into these funds between FY2012 and FY2025, an average of **$289,395 a year**. **But not all of it is the town’s to redirect.** $408,113 of it went to the sewer funds and the Opioid Settlement fund — sewer deposits are Sewer Enterprise retained earnings, which is ratepayers’ money and stays in the sewer system, and the opioid money is a legal settlement dedicated by the article that created it. Neither could be sent to a school deficit whatever Town Meeting wanted. | | per year | share of the FY28 gap | |---|---:|---:| | Everything voted in | $289,395 | 31% | | The part that could be redirected | **$260,244** | **28%** | **This is the option with the right shape and the wrong size.** A deficit that returns every year is only ever closed by money that arrives every year, and this is that — it just is not enough of it. What it costs is whatever the funds were being built for: equipment the town would then borrow for, and a reserve that is part of how it is rated when it borrows. --- ## 2. Can the town spend what is already there? **$3,147,179 of it, yes.** That is the general Stabilization Fund, which a two-thirds Town Meeting vote may appropriate for any lawful purpose. Here is what happens if it is spent against the gap until it is gone: | year | the gap | covered from the fund | still short | fund left | |---|---:|---:|---:|---:| | FY28 | $930,273 | $930,273 | — | $2,216,906 | | FY29 | $1,530,474 | $1,530,474 | — | $686,432 | | FY30 | $2,197,945 | $686,432 | $1,511,513 | $0 | **It buys two years.** In FY30 the fund is empty, the gap is $2,197,945, and every structural choice the town had in FY28 is still in front of it — with $3,147,179 less in reserve and nothing to show a bond rating agency. *And this is the generous version.* It assumes Town Meeting votes the whole balance to the schools, in one go, with no reserve kept for a roof, a fire engine or a snow season — which is what the fund is for. --- ## 3. What it costs to be wrong **The fund has never been drawn in anything this archive can read.** Of the 8 withdrawals from any stabilization fund we can read out of the annual reports, 7 are sewer funds and one is Health Insurance. Not one names the general Stabilization Fund. That is a floor rather than a history — money also leaves inside articles about something else — but it means the town has no recent practice of spending this fund, and drawing it to zero would be without precedent in the record we hold. **And here is what one bad year costs.** In FY2026 the town budgeted $355,571 for snow removal and spent **$1,038,092** — 292% of the appropriation, **$682,521 over**. Snow deficit spending does not require a vote: under M.G.L. c.44 §31D a town may overspend snow and settle up afterwards. Something has to settle it. | | | |---|---:| | One snow year over its appropriation, FY2026 | $682,521 | | The Reserve Fund, the town’s declared contingency, FY2026 | $185,000 | | The general Stabilization Fund today | $3,147,179 | | The same fund after the burndown above | $0 | **The Reserve Fund covers 27% of one snow year’s overrun.** It held $185,000 in FY2026 and spent nothing of it. The stabilization fund is what stands behind it, and it is about 4.6 snow years deep. At zero it is none. ### What has been said about this, in the town’s own rooms **For keeping it — the Town Manager, in the interview that got her the job.** Asked about her fiscal philosophy by the Select Board on 14 January 2025, Town Manager Warren-Dyment said that “in this post inflationary world, you can’t be as conservative but with that said, making sure one-time funds are put away for rainy days is also critical,” and added “that Lunenburg’s stabilization funds are looking good and that there is a strong commitment from the community to put away money into stabilization funds of various types and that should continue.” ([the minutes](/docs/minutes/text/select-board/2025-01-14-minutes-rr2026-09-18-draft.txt)) **For spending it — a resident, at public comment.** At the Select Board on 14 April 2026, after listing the cuts in the balanced budget: “This budget is going to surgically screw over the children in town while we sit on 3.2 million dollars and not even mention it. If cutting teachers and all this support for kids isn’t a rainy day, then what is? … I hope you speak to why touching the rainy day is a far worse event than the impact on families of young children.” *(our machine captions of the recording, not a minute — [the video at 32:36](https://www.youtube.com/watch?v=sF7yvu2C25w&t=1956s))* **And the School Committee, weighing this exact lever.** On 12 March 2025, discussing where $500,000 would come from, a member said the town needed to tell the community if it was “going to take this very strange Road of not funding the stabilization funds.” *(our machine captions of the recording, not a minute — [the video at 50:43](https://www.youtube.com/watch?v=b7caO9Kd7VA&t=3043s))* **The question that was asked and not answered.** At the Finance Committee on 13 March 2025 a resident asked “if there is a direct impact on the town’s bond rating if the town does not contribute to OPEB.” The minutes record the question and no reply. ([the minutes](/docs/minutes/text/finance-committee/2025-03-13-minutes-7009.txt)) *Nothing in this report picks a side between those two. What it can do is make sure both people are arguing over the same figures.* **What this does NOT establish, and it is the part everyone will assume.** Nothing here says what a rating agency would do. This archive holds no bond rating, no rating report and no official statement for Lunenburg — the documents that would say what the town’s rating is, what the agency said about its reserves, and what it costs per million borrowed if it moves. Nor does it hold any written reserve policy or target for the town, so there is no stated level this fund would be falling below. Both are registered at [what we cannot answer](/what-we-cannot-answer). --- ## 4. Then what? That is the question the first two exist to set up, and the honest answer is that neither is a solution; they are timing. - **Spending the balance is a one-off.** It moves the problem two years and makes it worse, because the gap grows while the reserve does not come back. - **Stopping the deposits is permanent** and covers about a quarter of the first year’s gap, falling as the gap grows. - **Together** they cover FY28 and most of FY29 and still run out. A reserve spent on an operating cost buys one year of that cost. That is the same arithmetic [free cash](free-cash.md) makes, for the same reason: both are money the town has ONCE, set against a cost it has EVERY year. --- ## What this does not show - **Whether Town Meeting would vote for any of it.** This is arithmetic about what the money could do, not a prediction about what anybody will do. - **What the funds were being built for.** Diverting the deposits has a cost that does not appear in this table: the equipment, buildings and reserves they were accumulating toward. - **What a rating agency would make of it.** A town that spends its stabilization fund borrows on different terms afterwards, and nothing here measures that. - **Interest.** These balances earn about 3.5% a year, which is real money and is not modelled above; it would extend the burndown by months rather than years. --- ## Where the figures come from - The gap, year by year: `model/finance.py`, the same projection the rest of the site uses. - The balances: the town’s general ledger at 31 March 2026, reconciled to the total the accounting system prints for them. - The deposits: every Town Meeting article that put money into one of these funds, FY2012 to FY2025. 7 of those articles print no amount, so the totals are a floor. - The restricted/divertible split is OURS, read off which fund each deposit went to and where that fund’s money comes from.