Common Misconceptions
about Newton's Finances

We have millions in ARPA money that can be used instead of an Override.   FALSE

• Newton received $63.5 million in federal APRA funds. $58.6 million has already been allocated for COVID relief and recovery. 

• For context, the cost to rebuild all 3 school buildings (Horace Mann, Franklin, and Countryside) is $145 million. 

• The city has kept $4.9 million (around 8%) of the ARPA funds in reserve in case we need it for continued COVID-19 response and recovery efforts.

 

Rainy Day Funds can be used instead of an Override.   FALSE

• 5% of Newton’s budget ($24 million) must be kept in the Rainy Day Fund to be used in case of a catastrophic fiscal event or significant reduction in state aid.

• Many other AAA-rated cities keep more than 5% in their Rainy Day Fund. 

• Using Rainy Day Funds to pay for roads or schools every year is like using your personal emergency fund to pay monthly bills: it is ok in an emergency, but it is not a good long-term plan.

 

Free Cash can be used instead of an Override.  FALSE

Free Cash is the money in the City budget left over from the previous year.  This is how Newton spends its Free Cash:

• Up to $1.5 million Free Cash goes to next year’s operating budget.

• Some goes to replenish Rainy Day Funds depleted in the previous year.

• A minimum of 40% is put in the Rainy Day Fund to keep it at its target level. 

• Any additional Free Cash will be used for one-time, non-recurring expenditures.

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Overlay Funds can be used instead of an Override. FALSE

• Cities must keep an Overlay in case of a shortfall in real estate tax revenue. 

• Right now, Newton has more than usual in the Overlay Fund because Eversource made a one time payment to Newton as a result of litigation. However, the case isn’t final yet - Eversource appealed - and Newton may be required to pay the full amount, plus interest, if Newton ultimately loses the ligation.