from the Massachusetts DOR "A Guide to Financial Management for Town Officials"

The role of the finance committee is described in the Massachusetts Finance Committee Handbook published

by the Association of Town Finance Committees. A new edition is published every few years, with annual supplements

published in the intervening years. It is an excellent resource on the role of the Finance Committee.

The primary duties of a finance committee are to advise and make recommendations to town meeting on the

budget and other areas of finance. It has statutory authority to make transfers from the town's reserve fund, (a

contingency fund usually created as part of annual budget appropriations) to departmental budgets for extra-

ordinary or unforeseen circumstances. It may approve with selectmen some budget transfers during the last two

months of the fiscal year and the first 15 days of the next year in order to close out the town's financial records.

In addition to its research and advisory role.

5.2:WHAT ROLE DOES THE FINANCE COMMITTEE PLAY IN THE
             BUDGET PROCESS?


The finance committee is primarily responsible for submitting its recommendations on the budget to the town
meeting. In assuming this responsibility, the committee influences the entire budget process. The committee is
also commonly involved in the budget preparation, which involves the development of budget forms and, in many
communities, the establishment of budgetary guidelines for department heads. Once departmental budget requests
are submitted, the committee reviews them all and makes recommendations on the requests to town meeting.
Prior to town meeting, the finance committee often conducts budget hearings to allow more extensive review of
the budget.

5.3:HOW CAN THE FINANCE COMMITTEE PREPARE A BUDGET WHEN

              REVENUE AND EXPENDITURE ESTIMATES ARE ALWAYS CHANGING?

Preparing a budget involves making some judgments or educated guesses about future needs and resources. It is

difficult for any financial projection to be precise. Estimates on revenues and expenditures must be made with

the benefit of historical analysis and a knowledge of changing conditions that may alter any historical trends.

Computers can help local officials analyze the available information. Furthermore, once the initial estimates are

made, they must be continually reviewed and revised as more timely information becomes available.