Council Considers Spending $3.6 Million in State Aid

The Cambridge City Council last night turned its attention to finances, discussing but not acting on two spending proposals of close to $1 million each.

City Manager Robert W. Healy presented the nine-member body with two budget allocations--one dividing state aid to Cambridge and the other redirecting funds in the school department.

The councilors postponed a vote on both matters until December 5, in deferance to Walter J. Sullivan and Mayor Alfred E. Vellucci, who were absent from last night's session.

The city received $3,616,000 in state aid, of which $117,800 has already been spent. Healy recommended that the bulk of the remaining $3,498,200, be spent on four sizeable allocations.

The largest is a $1.6 million salary adjustment for the school department. When the council passed the fiscal 1984 budget last spring, the Cambridge School Committee had not settled a contract dispute with the Cambridge Teachers' Association, and Healy had agreed to give the Committee a greater percentage of the state funds.

A $1 million chunk will go to the Cambridge Hospital to offset projected shortfalls in revenues. The allocation would allow the Cambridgeport and Kennedy neighborhood health clinics to remain fully staffed.

The other two large expenditures are deposits to two funds Healy said will clarify Cambridge's long-term financial situation. A year-old fund used to stabilize the city's debt service on municipal bond sales would receive a $950,000 deposit.

The city would also send $1 million to a new reserve created to help Cambridge meet pension commitments. According to a 1979 actuarial study, the city has a pension liability of $92,778,369, which is financed by a pay-as-you-go structure established by the state.

Both allocations are tricky politically because they do not result in immediate capital improvements. But Healy told the council the spending proposals are "good, sound, long-range planning."

There are lots of other demands for that $1.6 million; thousands of them," Healy said in an interview last night. "If we do this now and we go for future bond issues for other capital expenses, we have a better rate because the financial community sees that we are prepared to meet our future obligations."

He added sending state aid to operating budgets was bad planning because the funds might not be available in the next fiscal year.

"This city council is astute enough to see it makes sense for the financial planning of the city," Healy said. "I'll give them credit if they pass this resolution because it is not a sexy one."

The councilors were less amenable to the transfer of $800,000 from the school department's debt stabilization fund to pay for excess expenditures.

Healy said the redirection of funds will make next year's school budget difficult to meet because of an unplanned increase of $1.1 million in debt service.

"I want to avoid chaos and disruption in this school year," he said explaining the proposal. Without the transfer, the schools would run out of funds in January.