Newtown Applies for DCED Grant to Assess the Township’s Financial Condition
At the January 23, 2019, Board of Supervisors meeting, a resolution was passed authorizing the Township Manager to apply for a matching $40,000 Department of Community and Economic Development (DCED Definition) grant for implementing an Early Intervention Program (EIP Definition) that will assess the township’s financial condition and identify additional sources of income.
This is a matching grant. If the Township is awarded a grant, it must match the amount with its own funds. $40,000 is the maximum grant applied for. That anticipates a total budget of $80,000. However, the actual expense of hiring consultants for the project may be less the projected budget.
[Listen to this podcast and learn more about the EIP and the grant process: “Andrew Sheaf Talks About DCED's Early Intervention Program”]
The following are the questions and answers from the EIP grant application submitted to the DCED on March 15, 2019.
What do you plan to accomplish with this project?
Newtown Township is currently facing stresses on Township finances. The Township will need to address fire protection and emergency response needs that will require additional capital resources.
In the past, the Township has relied heavily on the EIT Definition [Earned Income Tax] to fund a large portion of its budget. That may no longer be possible as neighboring municipalities are implementing the EIT to support their own budgets. [For more on that, read “Earned Income Tax Trends”.]
Long-term budget needs must be anticipated and addressed now if the Township is to continue to be able to meet the needs of its residents. There are several critical factors, which must be addressed: what has been the practice of using reserve funds to offset other current budget needs.
By 2020, the tax millage dedicated for loan repayment for the construction of the Township Building will no longer meet mandatory increased yearly payment amounts. It is critical that changes in the budget process be changed and new sources of income must be sought.
How do you plan to accomplish it?
Step 1: Financial condition assessment: a multi-year trend analysis of historic financial data and an assessment of current budget performance will be performed by the consultant as a means to establish a realistic baseline of the township’s historic and current financial condition.
Staff will provide the consultant with current budgeting and financial challenges and assist with creating a five-year fiscal projection, estimating revenues, expenditures and fund balance levels. Staff will also share current practices with the consulting team to provide a solid understanding of what practices are currently in place.
Step 2: The consultant will make recommendations to the township regarding the following:
- Possible changes to the operation of the township
- Proposals regarding establishing a multi-year budgetary process.
- Identification of additional sources revenue, including possible sources of economic development within the township.
How do you plan to use the funds?
The funds will be used to engage a professional consultant with experience and expertise in preparing a multi-year financial management plans under the EIP plan guidelines and terms. The consultant will also have extensive experience advising municipalities generally on public financing matters.
The main purpose of the program is to establish short-term and long-term priorities and objectives that will strengthen the managerial and fiscal capacity of the township.
A secondary, but, as noted in the “identified problem,” an extremely important objective of the purpose of this program is to identify additional sources of revenue for the township.
Posted on 18 Mar 2019, 12:59 - Category: Finances
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